MMO Business Report: Q3 Industry Reports

This week we have a few industry reports to take a look at for the end of Q3 2019 as well as Superdata’s monthly revenue charts. Plus Jagex has to come out and explain that it hasn’t been sold…yet again. There are only 9 weeks left in this year so before you know it we’ll be looking at the whole year in a glance. For now though, it’s Q3 and a few random pieces of industry news in this week’s MMOGames Business Report.

 

Jagex Hasn’t Been Sold

Jagex has had to clarify that they have not been sold after a Reddit thread with some regulatory statements that seemed to announce Fukong Interactive had sold Jagex to Platinum Fortune, which was believed to be “basically a shell company” of Fukong. GamesIndustry.biz reached out to Jagex to get clarification.

“As referenced in June, Fukong’s regulatory statements acknowledged that the company was looking to restructure its finances, and that resulted in announcements regarding the potential sale of Jagex,” said director of communications Rich Eddy.

“While the situation continues to progress, Fukong’s most recent statements advise the Chinese market that it has updated its financial information as negotiations continue. This is not a confirmation of a sale, which remains one of various possible outcomes.”

This isn’t the first time this year that this very same situation has come up. It also happened in July and was basically the exact same scenario as this time. If there is anything to take away from this it is that Jagex still might be sold in the future, but that potential has been on the table publicly since January and there hasn’t been any movement yet. So who knows when or even if it will actually happen.

 

Source: GamesIndustry.biz

 

Top Games of September 2019

Superdata has released their monthly game revenue charts for September and it’s bad news for some of the industry’s superstars. World of Warcraft saw a leap from 7th to 3rd in August thanks to the launch of WoW Classic, but in September it was back down to 6th. This isn’t because of the boycott, that won’t have an impact on the charts for another month or two. This was that initial surge of people who tried out WoW Classic going back to the other games they were playing. Fortnite has also dropped, Superdata estimates that the game saw a 43% decline month over month in September making it the worst month for revenue since November 2017. On console Fortnite dropped from first place to seventh in just one month. But, this all happened before Chapter 2 started so it’s really impossible to predict what future reports will look like for the game.

In August Pokemon Go had overtaken Honour of Kings for the number one position on mobile but in September Fate/Grand Order held the top spot, pushing Pokemon Go to number 2. Honour of Kings continued its drop down the charts and finished September in 4th place.

 

Source: Superdata Report

 

Worldwide Q3 Mobile Game Revenue

Global app revenue grew 23% year over year last quarter to $21.9 billion, but that isn’t the part of the new report from SensorTower that we’re interested in. We want to look just at mobile games which grew 20% year on year. Games accounted for 74% of all in-app spending, which is actually down two percent from Q3 2018. App Store users spent the most, having spent $9.8 billion in Q3 2019. That’s up 19% from the previous year. Google Play users spent $6.5 billion in E3 2019.

PUBG Mobile was the top grossing mobile game in the world for the quarter, grossing $496 million just in Q3 2019, a year on year growth of 652%. Pokemon Go was given the distinction of the fastest growing game by revenue quarter on quarter. It was up 63% to $308 million. Summer time is always good for Pokemon Go as kids are out of school giving them more time to run around and catch em all.

 

Source: SensorTower Report

 

Tencent Supercell Takeover

Top MMO News: March 9, 2016

Tencent has been on a roll recently with their investments, most recently having invested in Funcom. Well, now we can add Supercell to their list too. To understand the details of the deal though we have to have a bit of a history lesson.

In 2016 a Luxembourg consortium formed with the sole purpose of acquiring Supercell. They bought 81.4% of the mobile game developer which at the time was valued at $10.2 billion. Tencent had a 50% stake in the consortium which has now been increased to 51.2%. According to details from a filing on the Hong Kong Stock Exchange Tencent acquired $40 million worth of shares as part of a convertible bond. At this rate Tencent will have taken over the entire games industry by 2022, or at least it feels like it.

 

Source: GamesIndustry.biz

 

Q3 VR Report

Believe it or not the VR industry is still expanding. It certainly didn’t blow people away like they thought it would a few years ago but they are on track to bring in over one billion dollars in software revenue for the first time this year. Interestingly though it is location-based entertainment like those found in malls that are bringing in half of that revenue. Businesses have also caught on to the potential of VR. Enterprise headset revenue is on track to jump up 69% year on year. Superdata expects consumer spending on VR to more than double in the next 4 years to $2.4 billion.

The report from Superdata mostly looked at VR but it did also talk very briefly about AR, Augmented Reality games. There wasn’t really much data there, though they are expecting the genre to see growth from $1.8 billion in revenue in 2018 to $2.9 billion in 2022. They also pointed out that from June to August Harry Potter: Wizards Unite only earned 1% of the revenue that Pokemon Go brought in during that same period. As the report says, Harry Potter: Wizards Unite isn’t casting a spell on wallets.

Source: Superdata XR Q3 2019 Report

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MMO Business Report: Raph Koster Forms a New MMO Studio and Game Companies Avoid Paying Tax

This was a pretty exciting week for the MMO industry with the announcement of Raph Koster’s new MMO studio and Tencent investing in Funcom. We also have news about the revenue for Pokemon Masters and a report that shows 4 major game companies are using a UK tax policy meant to boost local developers to dodge paying millions in taxes. All of that and more in this week’s MMO Business Report.

 

Tencent Becomes Funcom’s Biggest Shareholder

Funcom Are Expanding With 40 New Jobs To Fill

Perhaps the biggest surprise this week was the announcement that Tencent had invested in Funcom and become its biggest shareholder. The Chinese company now owns a 29% share in Funcom. This is on top of owning or partially owning these others; Grinding Gear Games, Riot Games, Epic Games, Activision Blizzard, Ubisoft, Paradox Interactive, Frontier, and Supercell. As part of the agreement Tencent acquired all the shares that had belonged to the Norway based KGJ Capital AS.

“We are very pleased to see Tencent come in as the largest shareholder of Funcom,” says Funcom CEO Rui Casais. “Tencent has a reputation for being a responsible long-term investor, and for its renowned operational capabilities in online games.The insight, experience, and knowledge that Tencent will bring is of great value to us and we look forward to working closely with them as we continue to develop great games and build a successful future for Funcom.”

Funcom recently announced it had acquired exclusive rights to develop and publish games based on the Dune IP over the next 6 years. They’re already working on an open world sandbox game set in the Dune universe and they’re working closely with Legendary Entertainment who are releasing a new Dune movie next year.

 

Source: Press Release

 

Fortnite Revenue Down Significantly in the US

According to US market tracking firm Edison Trends Fortnite’s US revenue in July was down 52% year on year. That’s a 75% drop from its peak in December 2018. The firm also had a look at what consumers are spending their money on. In Apex Legends and Fortnite the answer was overwhelmingly virtual currency. Apex Coins accounted for 96% of spending on Apex Legends while V-bucks accounted for 83% of the money spend on Fortnite. For PUBG and Call of Duty it was the game itself that accounted for the majority of money brought in. For PUBG the game accounted for 94% of the game’s revenue with G-coins accounting for 4% and Packs accounting for 3%. Black Ops 4 was a slightly different story. The game accounted for 69% of revenue, 19% from CoD Points, 4% from Passes, and 8% from other add-on content.

Finally, the firm tracked loyalty by looking at how many people purchased something in game in June then did it again in July. Apex Legends performed the best with 62% of spenders buying something in June and July. PUBG was at the bottom of the 4 games they were studying at 38%.

 

Source: Edison Trends

 

Raph Koster Launches a New Studio with $2.7 Million in Funding

MMO icon Raph Koster has announced that he is launching a new studio, Playable Worlds with a starting fund of $2.7 million. The investment is being led by Bitkraft Esports Ventures with 1UP ventures, and multiple angel investors. The first project won’t have an esports emphasis though. The studio has said that they’re creating “an online world where a broad range of players can find a home, whether their preferred playstyle is exploring, adventuring, socializing, crafting, or player versus player combat.”

“I’m incredibly excited to bring a new world to players,” Koster said. “Technology has caught up to the visions we always had of alternate worlds where entire societies can form. It’s time for that dream to be fulfilled.”

Along with Raph Koster the studio has a lot of other big names from the MMO industry that include the following impressive list:

  • Mat Broome, Studio Art Director – H1Z1, Planetside, DC, and Marvel
  • Brian Crowder, Lead Server Engineer – SOE, EA, Zynga
  • Greg Costikyan, Lead Game Designer – Backflip Studios, Boss Fight Entertainment

 

Source: Games Industry

 

4 Major Video Game Companies Avoiding Millions in Taxes in the UK

According to a report from The Guardian, Sony, Sega, WarnerMedia, and Take-Two Interactive have all taken advantage of a UK tax policy that is intended to boost the domestic video games industry. They’ve been using the Video Games Tax Relief to avoid paying tens of millions of pounds in corporation tax.

WarnerMedia has reportedly claimed up to £60 million, Sony £30 million, Sega £20 million, Take-Two Interactive £42 million. Alex Dunnagan, a researcher at TaxWatch UK, said the new findings show the scheme had “become a cash cow for large, tax-dodging multinational corporations who are milking the system to extract hundreds of millions of pounds in subsidies from the British taxpayer. It is clear to me that much of the subsidy is unnecessary, as many of these corporations were producing hugely popular games since long before the introduction of VGTR.”

 

Source: The Guardian

 

Pokemon Masters Brings in $33 Million Globally Its First Month

Pokemon Masters has now had the second highest grossing launch month for a Pokemon mobile game, second only to Pokemon Go. Japanese spenders led the pack, accounting for 58% of the first month’s revenue. Meanwhile players in the United States brought in 19% of the spending, $6.3 million. Hong Kong, Taiwan, and France rounded out the top 5 markets for the game. Total spending during the first week averaged at close to $3.5 million a day, but since then it has been declining. Spending now averages $230,000 per day.

The game has been downloaded by nearly 12 million players globally on the App Store and Google Play. This puts its average revenue per download at $2.80. However, the Japanese playerbase spends an average of $12.90 per download, which matches the spending on Pokemon Go for the country. Players from the United States on the other hand are spending $2.33 per download.

The game isn’t taking the world by storm like Pokemon Go did, but it is performing incredibly well and it looks like it will have a long life, at least in Japan.

 

Source: Sensor Tower

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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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New Online Games Announced at Tencent Up 2019

Over the weekend Chinese gamers weren’t looking to GDC to find out about the latest and greatest games, they were watching Tencent Up 2019 where new online games were announced along with some familiar Western games being released in China.

Brawl Stars and Stardew Valley were just two of the titles we’ve been playing for a while now that China will finally have access to. At the end of 2017, it was reported that Stardew Valley had sold 3.7 million copies, this was just a couple of months after the game released on Nintendo Switch. Since then it has released on PS Vita, iOS, and Android. Now the game will be available to the biggest gaming market in the world.

While it is awesome that Tencent is taking more Western games to China, the real appeal of Tencent Up is when they announce new titles. There were four titles announced and we’re going to break them down below.

 

Codename LN, Land Next

It looks as though Tencent is getting in on the Battle Royale action with their very own game, LN. It is a PC game that brings together two things you don’t often see together; Steampunk and Ancient China. According to local media, movement looks similar to Apex Legends. It’s being made by Tianmei Studio, an internal Tencent team who worked on one of the PUBG mobile games as well as Call of Duty Mobile. There is no timescale or release date for this game yet and no word on if it will be released in the West. But, based simply on the setting, we don’t hold out a lot of hope for a Western release.

 

Codename SOC

Codename SOC is a mobile zombie survival game that has been in development for two years now. Lightspeed & Quantum Studios are the minds behind the game. Previously they’ve made a PUBG Mobile game and worked on more than a dozen titles since 2008. The game is powered by Unreal Engine 4 and boasts a seamless open world. Also, the trailer looks kind of badass so be sure to check it out. No word on a release date for this game or a Western release. But, we’re pretty hopeful about this one. Sure, zombie survival games have been done to death, but this game looks amazing and the fact that its open world leaves us wondering what we don’t know about the game.

 

Ace Force

Ace Force is an Anime style team shooter similar to Overwatch, except that it’s a mobile game. The game has a large variety of characters, each with their own unique abilities. There are several game modes and maps to play on. One interesting thing it also features is the ability to switch characters during play. While this game has seen a few small test phases in the past it is going into a larger beta phase next month in China. It’s possible that this game will see a Western release in the future, but it’s equally possible that we will never see the game. Our personal opinion here in the office is that it will largely depend on how well the game performs in China.

 

The Outcast Mobile

The Outcast is a Tencent IP that started its life as part of the Tencent comics platform. Thanks to its popularity it got a 2 season anime called Hitori no Shita: The Outcast which aired in 2016 and 2018. Now, it is being turned into a mobile game. The game has 4 clans which 2 unique characters in each who are dealing with the supernatural using their powers. What does that mean exactly? Who knows. There is no release schedule for this game yet. As for a Western release…it’s our opinion that it’s never going to happen.

 

Source: MMOCulture

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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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MMO Money: $7,000 Bundle for Shroud of the Avatar

It’s time to finally start getting back into our normal routines for the new year. That means it’s time for another look at the business side of the MMO industry. This week we’ve got lawsuit news, acquisition news, and a $7,000 bundle for Shroud of the Avatar.

 

Funcom Acquires Zona Paradoxal (ZPX)

Mutant Year Zero: Road to Eden

Funcom announced that it had acquired a 50.1% majority stake in Zona Paradoxal, a work-for-hire studio based in Lisbon. They have previously worked with the company on Conan Exiles, Mutant Year Zero, and other games.

ZPX will remain independent from Funcom and continue to work with other clients. However, Funcom is set to be their primary client going forward. Thanks to the acquisition the studio is also planning to double in size from where they are currently with 15 employees.

For Funcom, this means having more developers on hand to help them with their upcoming titles, of which they have 5 in the works. Conan Unconquered, a top secret game being released Halloween 2019 being made with RockPocket, a Heroic Signatures game, a Conan single player game, and an open world multiplayer game.

Source: Games Industry

 

Settlement Reached in 38 Studios Lawsuit

Do you remember 38 Studios? They were the studio that made Kingdoms of Amalur: Reckoning and were working on Project Copernicus that shut down in 2012 after running out of money and has since been the subject of a long legal battle. The studio was moved to Rhode Island after being promised a $75 million loan then failed. The Securities and Exchange Commission (SEC) argued that the studio was destined to fail after it wasn’t disclosed that they would receive only $50 million of the promised $75 million. This resulted in a lawsuit between the SEC and Wells Fargo and the Commerce Corp. That lawsuit has now been settled, however, the details have not been revealed and it seems pretty unlikely that they ever will be. We may not know how it ended, but it is nice to finally see the final chapter of 38 Studio’s story come to an end.

Though it is the end for the studio it may not be the end for the Amalur IP. In September 2018 it was bought by THQ Nordic. This means that yes, there is the possibility for Project Copernicus to be brought back to life. However, with the state of the MMORPG genre, it is far more likely that they will use the IP to create other games. Still, we have our fingers crossed for Copernicus.

Source: Gamasutra

 

Blizzard and Netease Extend Partnership

Diablo Immortal

While the Blizzard/Netease partnership has been received somewhat poorly in the West it is doing fantastically in the East, specifically in China. So much so in fact that they are extending their partnership until 2023. The partnership began in 2008 with Starcraft II and the Battle.net platform. Now they’ll be working together to bring World of Warcraft, the Starcraft series, the Diablo series, Hearthstone, Heroes of the Storm, and Overwatch to Chinese audiences for 4 more years. This seems to be leaving room for new games in the Starcraft and Diablo series. Does that mean we can expect more in the future? That does seem somewhat likely, or maybe they’re just leaving themselves open to possibilities. We will have to wait and see.

Source: Press Release

 

Tencent Gets Minority Stake in Vermintide Developer Fatshark

Vermintide and Vermintide 2 are quite easily the most popular multiplayer Warhammer games to have been made in a long time and that is paying off for their developer Fatshark. Tencent has now acquired a 36% share of the company worth 500 million kronor, approximately $56 million.

Fatshark has said that the investment will strengthen its position as an indie developer and help facilitate future growth. CEO Martin Wahlund spoke to Games Industry saying, “We are excited to announce that Tencent has chosen to invest in Fatshark. Tencent is known for investing in market leading top rated companies. With the investment, Fatshark is in a strong position to continue to grow while staying independent. Our unaltered mission will be to bring high-quality games to our fans around the globe.”

We can’t wait to see what this means for Fatshark and Vermintide 2 in the future.

Source: Games Industry

 

Activision-Blizzard Securities Fraud Investigation

A law firm is currently investigating claims that Activision-Blizzard committed securities fraud or other unlawful business offenses following the news that Bungie would be parting ways with Activision. In its press release, the law firm offered very few details but did specifically mention Bungie and the sharp decline in Activision’s stock price following the announcement. They also offered a link to join a possible class action lawsuit.

This is clearly only the beginning of this story. We’ll be keeping a close eye on the story and Activision’s share price, which has been slowly recovering since all of this took place on January 11th.

Source: Press Release

 

Shroud of the Avatar Offering $7000 Bundle to Fund Episode 2

Shroud of the Avatar is getting a bit of a change in its business model, moving to what is now considered a more traditional one. However, they’re also offering 8 people who happen to have $7000 laying around the opportunity of a lifetime. The Lord of the Island: Episode 2 Bundle costs $6,999 and includes a ton of amazing in-game and real-life perks. What do those perks include? A silver ring crafted personally by Lord British himself and an in-game version of it. A tour of the Portalarium offices. Finally, dinner with Lord British, Darkstarr, and Atos either in Austin or New York City. This offer is only available to 8 people total and one of them has already been sold.

Of course, the majority of us don’t have $7,000 that they can spare but that’s okay! We can still buy items in the cash shop which is about to change. The cash shop will be available in game, while the website will only have currency and maybe one or two things available in it. This is coming after the company has had a lot of feedback about the cash shop. This will also mean that the cash shop can be localized, something that hasn’t currently been possible.

Source: Official Newsletter

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TJ Sports to Handle League of Legends in China

Tencent and Riot have come together form TJ Sports (short for Tengjing Sports), a new company based in China that will oversee and expand League of Legends esports in China. Both companies have invested in this new company equally and the management will also be made up of top executives from both companies. So far, $78 million USD in capital has been made available for this new company.

TJ Sports has laid out three main goals for 2019. First, finalize major rules such as esports rules, wage rules, and business cooperation rules. Secondly, Optimize their business model. Lastly, improve new player development plans.

At the same time, the announcement of this new company was made the partnership list for the League of Legends Pro League (LPL) for 2019 was released. The head partner for this year is Mercedes-Benz. Other partners include KFC, Alienware, Doritos, and L’Oreal Men Expert just to name a few. The equipment partner will be with DxRacer. Media rights partners include Huya, Douya, Panda TV, Bilibili, Tencent Sports, and Weibo.

All of this is important to note because last year LPL broke the 15 billion viewers record. So there’s certainly a lot of money to be had. It makes perfect sense that with those kinds of numbers you see a new company being formed just to deal with it. In the future, it looks like we can expect more news about sponsors as they’re looking for title sponsors. Nike is also currently in negotiations for a sponsorship deal. Though according to sources this would be exclusively under the condition that LPL teams don’t seek out other sponsorships. It will be interesting to see if the Nike deal goes ahead or not as that is quite a hefty restriction to put on teams.

TJ Sports is also going to be involved in charity and social work, though there is no further information on that yet.

 

Source: Esports Observer, MMOCulture

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MMO Money: Arena of Valor Finds Success At Last

Here we are at the second to the last Tuesday of the year, which means this is our last look at the news from the business side of the games industry. Next week we’ll have an article that looks back at the biggest stories of the year so keep an eye out for that. For now, though we have Blizzard to discuss along with the Zenimax vs Oculus lawsuit, esports, and Arena of Valor’s success on the Nintendo Switch.

HGC Western Clash

 

Blizzard Kills Heroes of the Storm Esports

There have been a lot of unpopular things going on with Blizzard recently that are leaving lifelong fans wondering what has happened to the beloved brand. Most recently Blizzard took a chainsaw to Heroes of the Storm. They put an end to the competitive esports scene saying that the Heroes Global Championship and Heroes of the Dorm won’t be returning in 2019. This very sudden change has put a lot of people out of jobs. Stars who left college to pursue esports, team managers wondering what to do next, and many others from all aspects of the esports scene.

At the same time, Blizzard says that they will continue developing the game, though the cadence of releases will change. In other words, they will be releasing content less often. Blizzard also moved some developers, though they didn’t say how many, from the Heroes of the Storm development team to other teams. While they aren’t giving up on Heroes of the Storm completely it certainly sounds like this is the beginning of the end for the game, which would be just another unpopular move on Blizzard’s part. That really breaks all of this to one final question….is Blizzard working on a Battle Royale game? Only time will tell, but based on the decisions they’ve been making recently it wouldn’t be too much of a stretch.

Source: Official Site

arena of valor switch

 

Arena of Valor Downloaded 1 Million Times on Switch

In China, Tencent has seen massive success with Honour of Kings. It’s been at the top of the mobile charts every month in terms of revenue for the entire year. However, when they released it as Arena of Valor in the West it wasn’t a massive success at all. At least that is until it was released on the Nintendo Switch. Since Arena of Valor launched on the Switch at the end of September it has been downloaded 1 million times and the United States was the biggest market. While Arena of Valor hasn’t been performing as well in the West as it has in China it hasn’t all been bad news for the game. In September the MOBA reached the $15 million milestone in player spending between the App Store and Google Play. At that time the game also experienced 49% growth month over month in comparison to August. So even almost a year after launching it was still growing in a big way.

Arena of Valor is Tencent’s first console game, but with results like this, it almost certainly won’t be the last. This is especially true as the company has to try to claw back from the really quite awful year they’ve had.

Source: Games Industry

 

Intel and ESL Announce $100m Esports Investment

Blizzard might be taking a step back from the Heroes of the Storm esports scene but in other corners of the esports world, things are looking good. Intel and ESL have announced that they will be continuing their partnership to 2021 and more than $100 million in investments in the industry will be made. The partnership between the two companies is 18 years old, making it the longest standing partnership in all of esports. The deal will help to drive growth in new regions which includes a focus on hosting and large-scale events within some Asia-Pacific countries.

“ESL and Intel have worked side by side on growing esports for nearly two decades,” said Ralf Reichert, ESL founder and co-CEO. “We built a number of cornerstones of this industry together and helped many gamers in becoming legends of the sport. The long-term extended partnership with Intel opens even more opportunities for us to take our efforts to a whole different level on a global scale.”

The Vice President and General Manager of VR, Gaming, and Esports at Intel had this to say, “This joint investment with ESL into the ecosystem means that the esports growth and innovation that we’ve led over the past two decades will continue. This partnership will advance the rapid evolution of esports, and Intel is committed to ushering in this new era with technology solutions that place the gaming community and fans first.”

If you’re wondering how the esports industry is doing, on the whole, we’ll have more on esports in the coming weeks as we take a look back at 2018 from a business point of view. So be sure to keep an eye out for that.

Source: Games Industry

 

Zenimax and Oculus Settle Their VR Lawsuit

It might feel like Zenimax and Oculus have been involved in a lawsuit over the Oculus VR system forever. It all started in 2014, which certainly feels like an eternity ago. In 2017, Zenimax was awarded $500 million by a judge, but that was later cut in half upon appeal. That then led to even more appeals, though those have now been dropped. The two companies reached a settlement outside of court through the Fifth Circuit Court of Appeals mediation program. The terms of the settlement weren’t disclosed and they likely never will be.

Both sides seem to be quite pleased with the outcome, and Zenimax Chairman and CEO Robert Altman said, “We are pleased that a settlement has been reached and are fully satisfied by the outcome. While we dislike litigation, we will always vigorously defend against any infringement or misappropriation of our intellectual property by third parties.”

A representative for Facebook, who own Oculus said, “We’re pleased to put this behind us and continue building the future of VR.”

It’s nice to see this story finally put to rest.

Source: Games Industry

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MMO Money: Perfect World Bringing Steam to China

In this week’s MMO Money, we’re looking at a few industry revenue numbers relating to Q3 and all of 2018 so far in addition to layoffs, investments, and more. It wouldn’t be an MMO Money column if China and lootboxes weren’t mentioned and there’s some news on both topics this week. The FTC is finally getting involved with lootboxes and it looks like the trouble with the Chinese government may be coming to an end…hopefully.

 

Jam City Lays Off Employees Days After Multiple Acquisitions

Jam City, who is perhaps best known for Harry Potter: Hogwarts Mystery has announced that they have had layoffs within the company. This comes just a few days after they announced acquiring Bingo Pop. That came just a couple of weeks after they announced a multi-year contract with Disney in which they acquired Disney’s Glendale Games Studio. In August they also moved into a new studio space.

So with all that good news why did they layoff what one anonymous source called “a large number” of employees? Well, it looks like it is all part of a restructuring plan in which they focus more on the goals of their global business.

In a statement, Jam City said, “Jam City rolled out organizational changes today that altered some teams and staff positions. We are re-allocating resources to support the goals of our global business. This is an extremely difficult decision, and Jam City is making these changes with the utmost respect for every person affected. We are providing exit packages and other types of transition assistance to impacted employees.”

Source: Venture Beat

 

Perfect World Bringing Steam to China


At an esports event in Shanghai, Perfect World signed a contract with Valve that will bring Steam to China. It was signed in the presence of government officials, which is good news with all the recent trouble with foreign games trying to get into China. All new games on Steam China will have to be approved by the Chinese government. This could be a problem since they’ve not approved any foreign games since March. Games that are already in a player’s library may not be forced to be inspected if rumors are to be believed. Might this actually be the beginning of the end of the ongoing story about the Chinese government’s problem with games? We’ll just have to wait and see, but right now things are looking up.

Source: MMOCulture

 

US Game Industry Revenue Up 24% in Third Quarter

Just when you thought there was nothing more to be said about quarterly reports The NPD Group released a report on industry-wide consumer spending that shows revenue is up 24% year on year in the United States. That equates to $9.1 billion being spent on games from July to September. This brings total spending for the year so far up to $28.6 billion, putting the industry well on track to beating last year’s $36 billion total. Q4 2017 accounted for $14.7 billion of that.

Source: Games Industry

 

That all sounds great but a recent opinion article from Superdata’s founder Joost van Dreunen on Gamasutra has a much more bleak outlook on the future of the gaming industry. Here’s just a small taste of what he says. “Specifically, interactive entertainment revenue will soon start to flatline and, possibly, decline. … First, several of the biggest growth drivers have started to slow. Mobile gaming is showing saturation across different markets, including in China.”

I highly recommend reading the entire article on Gamasutra as it has a whole lot more to it that we can’t cover in a business roundup.

 

Niantic Invests in Holographic AR Display Company


Pokemon Go’s creator Niantic is one of several companies who have invested in DigiLens, who develop AR technology. This is the first time Niantic has invested in a company rather than taking it over. In just over a year Niantic has acquired four different companies: Evertoon, Escher Reality, Matrix Mill, and Seismic Games. Talking about DigiLens Niantic CEO John Hanke said, “DigiLens is on an amazing path, in collaboration with MCHC, to bring more affordable and accessible hardware experiences to players around the world, making it possible for characters and game play to be seamlessly woven into the real world, supported by compelling safe and lightweight plastic AR displays.”

Source: Games Industry

 

International Mobile Revenue for Tencent and NetEase Rose 382% in 2018

huge disappointment for Tencent
Despite the freeze on new game licenses in China international mobile revenue for Tencent and NetEase rose 382% year on year for the two publishers. Combined revenue for the two outside of China amounted to $376 million, a massive jump from last year’s $78 million. Netease made up 72% of that growth, which may be a bit of a surprise given that Tencent has games like PUBG Mobile. However, PUBG Mobile actually only made up 2% of Tencent’s mobile game business.

Source: Games Industry

 

Lootboxes: The Saga Continues


The Australian Environment and Communications Reference Committee has issued a 90-page report on lootboxes. The investigation lasted for 5 months and concluded that the issue is complicated. They go on to suggest that assessment should be performed on a case by case basis. They do acknowledge that when there is real money involved lootboxes may meet the definition of gambling. “However, there was broad consensus that where real-world currency is exchanged… loot boxes may most closely meet the definitions of gambling (both regulatory and psychological), and therefore a range of risks to players may exist.”

Meanwhile, in the United States, the Federal Trade Commission (FTC) have said they will investigate lootboxes. Joseph Simons, Chairman of the FTC said that the agency is concerned about manipulative in-app marketing and would likely look into various allegations against Google and others related to kids content.

Source: Broadcasting Cable

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MMO Money: Star Citizen Reaches $200 Million Milestone

This week we have a few last third quarter reports to take a look at. This time for NetEase, who is currently in the public’s eye for their work on Diablo Immortal and Tencent who have been having a terrible year as far as their gaming division goes. Star Citizen also reached an all new fundraising milestone, which was received about as well as you might expect. Finally, just a week after DayZ went into beta they reached a milestone of their own.

 

Star Citizen Reaches $200 Million Milestone

This was the week that Star Citizen reached $200 million fundraised for their game. As you might expect though it wasn’t all celebrations. In a letter to the fans, Chris Roberts said that there are supporters from 171 different countries stretching from one end of the globe to the other. He also talks about how far the company has come in the last 6 years, in particular growing from just a handful of staff to more than 500 employees in 3 countries. The letter also goes into some detail about the future, talking about a new alpha build that is coming up and plans for a Squadron 42 roadmap.

However, on Reddit, and indeed across the internet this proved to be the perfect time for those who have issues with Star Citizen to speak out. For all the money that Star Citizen has continued to bring in, there have been a lot of issues and concerns that the studio isn’t going to deliver on the promised game. As time goes on the voice of discontent grows louder causing even more of a rift between those who still have high hopes for the game and those who have given up all hope.

 

Source: Roberts Space Industries, Reddit

 

Tencent Gaming Revenue Continues to Decline

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

If you don’t already know, there is much more to Tencent than just making games. In fact, in China, they are a massive multi-armed internet company that has music services, social media companies, e-commerce, and even movies. Warcraft, Wonder Woman, and Venom are just a few titles they’ve done that you might have heard of. Unfortunately, while the company as a whole is doing amazingly, revenue is up 24% year on year, the gaming division is still taking a massive hit. Online gaming revenue is down 4% in Q3, much of that decline is from the PC sector. Mobile gaming, however, has seen a bit of a boost which did offset some of the damages. This seems to suggest that gamers are moving away from PC gaming into mobile.

During the quarterly report to investors, Tencent didn’t mention the freeze on game licenses in China. Instead, they focused on the fact that they released 10 games last quarter and they have 15 approved for monetization in the works. This should give them a bit of a boost as they do still have a bit to work with. The company may actually be able to weather this storm after all. But, so long as the news from the Chinese government continues to be grim Tencent’s gaming division will keep feeling the pain.

 

Source: Games Industry

 

DayZ Sells 4 Million Units

DayZ3

Just a week after transitioning into beta testing Bohemia Interactive have announced that DayZ has sold 4 million units. The game has been playable in Early Access since December 2013. By January 2015 it had reached the 3 million user mark. Meaning that it took nearly 4 years to get another million on top of that. In that time, of course, the industry has gone through quite a lot of changes. Most notably is the rise of the Battle Royale genre which has spawned some of the most popular games in the world. Meanwhile, the zombie survival genre, which DayZ helped usher in is barely a faint memory at this point. A number of games inspired by DayZ were released which then spawned other survival games like Ark: Survival Evolved and Conan Exiles. These days DayZ has acknowledged that they are a niche game for a niche audience and they aren’t going to be everyone’s cup of tea. They’ve also announced that they fully intend to stick to their 2018 launch date, which means they have just over a month left to go. When the game does finally launch it wouldn’t be too much of a surprise to see a small boost in purchases. But at this point, it seems likely that anyone who was going to buy the game has already done so and launching is merely a formality. Development will continue on the game well past launch as the studio continues to tweak the game to meet their goals.

 

Source: Games Industry

 

NetEase Quarterly Sees Growth

Diablo Immortal

Things are looking good for NetEase in the third quarter report with net revenue up, mobile gaming up, and success in their endeavors to bring Western games to China. Net Revenue is up for the company 35.1% year on year, bringing it up to 16.9 billion yuan, $2.5 billion USD. Of that online gaming accounted for $1.5 billion which is up 27.6% year on year. In Q3 the company released a number of quite successful mobile games. They also launched World of Warcraft: Battle for Azeroth in China which saw the number of subscribers and the revenue go up. They aren’t likely to feel any backlash from Diablo Immortals until Q4. Though the expected backlash financially isn’t expected to be nearly as bad as the outcry about the game would suggest. Minecraft in China got another 50 million players between the Q2 and Q3 reports. During the report, they talked about the global audience and how it has benefited them.

“Additionally, we have taken a more global view of our online games business. As a result, our international expansion, took another leap forward this quarter, contributing more than 10 percent of total online game net revenues for the first time in our company’s history. We are also very excited about our collaboration with Blizzard to bring one of their biggest games to mobile players, increasing our visibility and expanding our foothold in the global online games market.”

 

Source: Quarterly Report

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