(1) Netflix Gaming Revving Up: Beta Testing and Acquiring Game Studios
Netflix is starting to fully invest into their gaming service, starting testing in Poland in August, and announcing acquiring Night School Studio on September 28th.
As the main content of Netflix being video content, Netflix games seems to be starting with content based on Netflix IPs. The beta testers of Netflix Gaming in Poland were given access to two games based on the science fiction series Stranger Things. The two games were Stranger Things 198 and Stranger Things 3, both developed by American developer BonusXP.
(Image Source: Netflix)
According to Netflix's announcements, the games that are to be released by Netflix Gaming will not include In-App Purchases and will not cost extra to the current Netflix subscription. However, it is expected that once Netflix Gaming grows in scale, there is a possibility that it can be operated as a separate subscription, or that the price of a subscription will rise.
To accelerate their entrance into the gaming industry, Netflix has also started acquiring game studios. The first game studio to be acquired by Netflix was Night School Studio, a game developer that is famous for narrative driven games. Some previous works of Night School Studio include Oxenfree, Next Stop Nowhere, and Mr. Robot, based off the Amazon Prime Original content. Netflix has announced that it will include previous works of Night School Studio in Netflix Gaming.
Night School Studio's co-founder Sean Krankel wrote, in a personal blog on the Night School Studio homepage, that "We truly believe we’ve got a chance to positively impact the way people discover, play, and share story games with each other".
As Netflix threatened companies such as Disney with their original content, it will be worth keeping an eye out to see if Netflix will also threaten companies within the gaming industry.
(2) Epic vs Apple, Who Won?
The legal dispute between Epic Games and Apple, which has continued from last year, has reached an initial conclusion as a ruling was reached by a Californian court on September 12th.
The legal battle began as Epic took issue with Apple's payment processing limitations, which lead to Epic's Fortnite being pulled from the app store. As a reaction to this, in August of 2020, Epic decided to sue Apple over monopolistic practices.
While the California courts agreed that the ban of outside payment processing is anti-competitive action, they did not accept Epic's claim that Apple has a monopoly. Also, the court found that Epic was in violation of its contract with Apple by providing a outside link for payment processing, and fined Epic 3.5 million dollars, or 30% of the profits of the revenue Epic earned by bypassing Apple's payment processing system.
While both Apple and Epic both had gains and losses with this ruling (read the full ruling), it seems that Apple has come out of it more satisfied than Epic. The judge of the case, Judge Yvonne Gonzalez Rodgers, even said during their ruling that 'success is not illegal'. Apple's legal adviser has claimed that this is an important victory for Apple. Epic has decided to and are preparing to appeal the judgement.
(Image source: The Indian Wire)
As Korea passed its revision to the Telecommunications Business Act, said revision currently being more well known as the anti-Google act, on August 31st, Epic requested that Fortnite's developer account be reinstated in Korea. Apple has denied this request and has told epic that even if the law is passed as is, Apple has no legal requirement to reinstate Fortnite's developer account privileges. Apple further stated that Fortnite will remain off the App Store until all legal proceedings, including appeals, are over..
While this ruling seems to favor Apple, with the passing of Korea's revision to the Telecommunications Business Act and Europe's and the US's interest in antitrust action against big tech firms, it will be interesting to see how these affect Epic and Apple's appeal process, and beyond that, the entirety of mobile game payment processing.
(3) Ad Revenue is Growing in Importance in the Mobile Gaming Industry
The two major business models of mobile games currently are in-app purchases and ads. Which of the two generate more revenue?
According to market research company Omdia, in 2021 in-app purchases generate double the profit of advertisements. The current percentage of revenue generated by ads is currently 33.8%, with in-app purchases accounting for 66.2% of total revenue.
The interesting point is that the percentage of ad generated revenue is continuing to grow proportionally to that of in-app purchases. in 2016, ad revenue was only 17.6% of total revenue, growing to 33.8% by 2021, and is estimated to grow to 42.2% of total revenue by 2025. This is largely attributed to the rise of games that focus on an ad-based monetization strategy, including card, casino, puzzle, and sports games.
(Image Source: Omdia)
Also, according to focus group testing done by audio advertisement solution provider AudioMob, gamers say they prefer audio ads as they do not bother or interrupt game play.
It may be interesting to consider the usage of in-app purchases and ads, especially audio ads.
(4) Investments into Game Companies.
In August, India's midcore game developer SuperGaming raised 5.5 million USD in Series A funding. SuperGaming has achieved a 40% yearly revenue growth after receiving 1.3 million USD seed funding in 2019. SuperGaming's MaskGun currently has 50 million downloads, with their follow up, Devil Amongst Us, reaching 10 million downloads only a few months after launching. SuperGaming has announced that they will be releasing a Battle Royale game early next year. (Read the full article on SuperGaming's Series A funding)
The American game developer ProbablyMonsters raised 200 million USD through Series A funding on September 1st. It was announced that this is the largest Series A funding in the gaming industry history. ProbablyMonsters, a company created by previously Bungie CEO Harold Ryan in 2016, and has 3 subsidiary studios. Ryan announced that through this investment, ProbablyMonster aims to invest further in developing new IPs and studios. (Read the full article of ProbablyMonster's Series A funding)
Jam City, a North American subsidiary of Netmarble, known as the developer of "Harry Potter: Hogwarts Mystery" and "Cookie Jam" has received a 350 million USD investment, and through this investment has acquired the game developer Ludia for 165 million USD. Ludia ia well known as the developer of Jurassic World Alive. Jam City's founder and CEO Chris DeWolfe discussed how the acquiring of Ludia fits Jam City's long term strategies and goals.
(Image source: Jam City)
(5) China to Ban Children Under 16 from Streaming
In August, China announced a new restriction of time that children could spend gaming. Previously, the restriction was 90 minutes during weekdays, and 3 hours during the weekend. Under the new restrictions, children can only play 3 hours a week, an hour each on Friday, Saturday, and Sunday, from 8 to 9 PM. China justified their expansion of the restriction noting that many Chinese children are addicted to gaming and that this would negatively affect the growth of Chinese youth.
As the restriction went into place, on the first weekend, during the designated time, the most popular Chinese mobile games were flooded with users, downing the servers. It would have been a great disappointment for many Chinese teenagers who waited a week to play their favorite games and could not play due to the servers being unable to handle the sudden increase in traffic.
In addition to such restrictions, Chine has announced further restrictions on gaming and SNS usage. Among these restrictions, there was a ban on children under the age of 16 from live streaming. China has announced that in order to protect the privacy and protect private information of Chinese youth, that they will be reviewing games more strictly.