Tencent acquires Inflexion from Improbable

STUDIO’S NIGHTINGALE WILL NO LONGER USE SPATIALOS

•  Inflexion Games, the independent Canadian developer founded by former BioWare manager Aaryn Flynn, was sold to Tencent in its entirety by British holding company Improbable
•  Inflexion Games has a proven track record of developing engaging universes that combine compelling action with great gameplay
•  IG currently hard-at-work on adventure title Nightingale, was recently hit with the news that owner Improbable was essentially pulling out of first-party game development; The Tencent acquisition will at least offer the team some solid ground, with which they can find their footing and continue in their work
• Nightingale is due to launch in early access on PC later this year

Clash of Clans now has a separate server for China

IN ORDER TO MAINTAIN COMPLIANCE WITH THE CHINESE GOVERNMENTS’S REGULATION

•  As per the government regulations laid down by the Chinese government, a regular technical upgrade has removed Chinese players from clans that were formed on other servers and also removed foreign players from clans formed on Chinese servers
• The newer regulations have forced Clash of Clans to create a separate server for China
• These regulations have forced Chinese players to play on servers only within their country, where they cannot match with any overseas players
• Insight:

1. Chinese government officials have been tracking down on gaming and Esports extensively
2. Stringent restrictions have been placed on video games, which makes it very hard for companies to stay in the Chinese market
3. Companies that want to operate in China should set up a local server. This can only be done by getting an ICP( Internet Content Provider) license from Chinese Ministry of Industry and Information Technology (MIIT), which has become increasingly hard in the last few years following newer rules
4. These regulations have forced games like Fortnite Mobile to shut down their Chinese servers. EVE online also had to make a specific Chinese server, apart from its global server because of these regulations
5. Chinese officials had put a halt on game publishing for almost 8 months
6. If Chinese game makers distribute games overseas as domestic entities, they will inevitably face the question of whether overseas user data will be sent back to China, which will lead to unnecessary risks. As a result, it has become common for Chinese game companies to set up subsidiaries and even brand new brands overseas, like Tencent’s Level Infinite, and miHoYo’s new brand HoYoverse

NetEase 2021 revenue jumps 19% to US$13.75 billion, mobile games brought US$9.6 billion

BOOSTED BY NEW TITLES SUCH AS HARRY POTTER: MAGIC AWAKENED AND REVELATION

• Q4 2021

1. NetEase reported net revenues of US$3.8 billion, an increase of 23.3% YoY
2. Gross profit for the quarter rose 30.8% to US$2 billion
3. Mobile games accounted for 68.3% of net revenues for Q4 2021, roughly US$2.6 billion

• FY 2021

1. NetEase reported a revenue increase of approximately 19%, reaching US$13.75 billion
2. Gross profit for the full year increase by approximately 20.5% to US$7.37 billion
3. Mobile games revenue accounted for approximately 70.4% of the overall yearly revenue, roughly US$9.6 billion
4. Revenue increase to its newly released titles, such as Harry Potter: Magic Awakened and Revelation, as well consumer spending from existing titles, including Fantasy Westward Journey

• Investment Strategies

1. 12 investments in 2021, 6 in China market, 6 in oversea market
2. Focusing on waifu mobile game developers in china
3. Focusing on PC/ console developers in Oversea market
4. With the further transformation of the China market structure, as well as the development and changes of players' consumption concepts, abilities, and value judgments, PC, console are again being regarded as a powerful driving force for the development of the industry
5. NetEase has also further focused its attention on overseas and PC games

37 games Q4 net profit exceeded ￥1 billion(US$158 million) 

THANKS TO THE NEW LAUNCH OF DOULUO CONTINENT & CALL ME BIG BOSS

•  Company is expected to achieve a net profit of ￥2.8 billion(US$ 442 million) in 2021, a YoY increase of 1.41%-3.23%
• The good performances due to the few launches of new products in the domestic market and the continuous development in overseas markets
• New launched product in 2021

1. China: Continent: Soul Master Duel(3D CBG), Archangel of Glory(MMORPG), Douluo Continent(Idle CBG)
2. Oversea: Puzzles & Survival(Survival & Matching 3), Call me big boss(SIM RPG) and Castle in the Sky(MMORPG)
3. Through the new game products, we can see that the dependence of 37 has on MMO products has dropped significantly, and replaced by a comprehensive exploration of multi-category products including matching3, CBG and SIM

FIFA Mobile and more pulled from Vietnamese app stores

LOCAL REGULATIONS ISSUES LEAD TO COMPLETE SERVICE SHUTDOWN

• EA has revealed that FIFA Mobile is no longer available to players located in Vietnam
•  In an official post, EA has stated that the reasoning for the service shutdown is due to "local regulatory issues", and that the game will be removed from the App Store and Google Play
• Not only will the games be unavailable to download, but those who have already installed the game will not be able to access it at all
• EA has not ruled out the possibility of the game coming back to the country in the future, but cannot yet confirm if this is workable. In place of this, EA Sports has stated it will "continue to pursue ways to engage" with its fans in the country
• In 2019, Supercell pulled its mobile games portfolio, including Clash of Clans, Clash Royale, and Brawl Stars, from the country due to issues surrounding local regulations
• After Fifa Mobile, Fate/Grand Order also shutdown in Vietnam, and maybe more coming

AppsFlyer: Apple’s privacy update caused 35% in-app purchase revenue decline

iOS USER ASQUSITION SPEND FELL 13%, ANDROID JUMPED 35%

•  According to a new report from mobile analytics firm AppsFlyer, Apple’s App Tracking Transparency (ATT) update caused a 35% decline in in-app mobile games purchase revenue
•  Apple’s new privacy features that require developers to ask users for permission to collect their data
• Android figures remained consistent and increased by 10% by the end of 2021
• In-app ad revenue increased 55% on Android devices, driven by hypercasual and hardcore mobile games
• iOS user acquisition (UA) spend suffered a fall of 13%, whereas Android UA spend jumped 35%
• The total number of mobile games installed on iOS fell 6% YoY in 2021

EDENS ZERO Pocket Galaxy is launched in Global market

NEW GAME PRODUCT

•  The new RPG is launched by Konami on 24th Feb in Global Market
• The game is based on IP EDENS ZERO
•  iOS/Google Play

 2021 Korea game company revenue

NEXON IN THE FIRST PLACE, NCSOFT DECREASED, NETMARBLE IS GROWING

• Nexon: Revenue and operating profit is decreased but recorded the highest operating profit ratio with increased net profit

1. Revenue were 274.5 billion yen, down 6% from the previous year, and operating profit decreased 18% to 91.5 billion yen. Net profit was 114.9 billion yen, an increase of 104%
2. Based on the success of the new 'Blue Archive' and the solid performance of IPs such as 'Sudden Attack' and 'FIFA Online 4’

• NCSoft: All operating indicators decreased

1. Revenue decreased by 4% to 2.308.8 trillion won, and operating profit fell 55% to 375.2 billion won. Net income fell 33% to 395.7 billion won
2. The operating profit decreased due to an increase in operating expenses such as marketing and labor costs.

• Netmarble: Operating profit is decreased, but both revenue and net profit increased. In particular, Netmarble recorded triple-digit growth in revenue, operating profit, and net profit in the fourth quarter alone

1. Sales increased 20.4% year-on-year to KRW 2.55 trillion, and operating profit decreased 30.3% to KRW 154.5 billion. Net profit rose 4.2% to 252.9 billion won
2. In particular, the proportion of casual game revenue increased from 22% to 40% thanks to SpinX Games' game lineup

Vplay - a new publisher in Vietnam supported by government 

A NEW PUBLISHER IN VN

•  Belonging to Vietnam Interactive Television Joint Stock Company (VTVlive)
• According to some unofficial information, Vplay's orientation in the upcoming 2022 is to launch many high-quality and diverse

Gaming M&A, Financing & IPO Deals to exceed US$150B in 2022

JANUARY 2022 HAS EXCEEDED US$85B + IN ANNOUNCED DEALS

• Accelerating Consolidation among PC / Console and Mobile, Asian and Western Players

1. Video gaming companies that have historically focused on the PC / console segment are expanding and diversifying into mobile ( Like Take Two)
2. Mobile-focused players are acquiring PC / console-focused companies, so the lines are blurring ( Like Tencent)
3. Tencent has been heavily expanding into the PC / console space, with 11 acquisitions in 2021 (Sumo Group, Turtle Rock and Klei Entertainment, etc.)
4. We will see more true cross-platform games across PC / console and mobile in the years to come, and having development and live-operations expertise in all segments will become increasingly important
5. Acquisition of western studios by Asian players will accelerate in 2022
6. Several western players acquired Asian studios, either to get access to Asian players or to content that is successful in the west. (Sweden-based Stillfront just acquired 6Wave (focused on Japan) and Zynga acquired Golf Rivals / StarLark based in China)

• Top western acquirers to watch this year are Embracer, EPIC, Amazon, and Netflix
• Will see several high-profile IPOs in 2022

1.  EPIC Games and Discord, two companies that are in the midst of multi-industry expansions and eager to capitalize on the growth potential they signify
2.  Niantic, Scopely, Voodoo, Jam City, Moon Active, Dream11, and MPL and some of them may decide to go public this year

• NFTs

1. There will continue to be heavy investment in the NFT and blockchain gaming space driven by both strategic investors like Animoca (invested in 52 gaming companies in 2021) and VCs like Andreessen Horowitz (rumored to be raising a $4.5B crypto fund)
2. 2022 is expected to significantly exceed last year’s investments of US$3.6B and we will likely see many new NFT unicorns among young gaming companies

Axie Infinity becomes first NFT series to hit US$4b in sales

OTHER NFT SERIES THAT HAVE EXCEEDED US$1B IN SALES ARE CRYPTOPUNKS, BROED APE YACHT CLUB

•  Blockchain game Axie Infinity has become the first NFT series to cross US$4 billion in sales
• Created by Vietnam-based Sky Mavis, The game rose to popularity last year, particularly in the Philippines, where people played the game for an additional source of income