gaminggamingauthorHirsh ChitkaraGaming NewsletterWant to better understand the $150 billion gaming industry? Get our newsletter every Tuesday.03807ace1f
Get access to Protocol
I’m already a subscriber
Want to better understand the $150 billion gaming industry? Get our newsletter every Tuesday.
Are you keeping up with the latest cloud developments? Get Tom Krazit and Joe Williams' newsletter every Monday and Thursday.
David Wertime and our data-obsessed China team analyze China tech for you. Every Wednesday, with alerts on key stories and research.
Want your finger on the pulse of everything that's happening in tech? Sign up to get David Pierce's daily newsletter.
Do you know what's going on in the venture capital and startup world? Get the Pipeline newsletter every Saturday.
Do you know what's coming next up in the world of tech and entertainment? Get Janko Roettgers' newsletter every Thursday.
Hear from Protocol's experts on the biggest questions in tech. Get Braintrust in your inbox every Thursday.
Get access to the Protocol | Fintech newsletter, research, news alerts and events.
April 6, 2021
(Was this email forwarded to you? Subscribe here.)
This week in Protocol Gaming, your weekly guide to the business of video games: Playco is looking to build a billion-person game, Chinese police bust a huge game cheating operation and CD Projekt Red sets its sights high.
(Was this email forwarded to you? Subscribe here.)
The Big Story
Inside Playco's pursuit of a billion-player game
Building a billion-player mobile game seems, if not outright impossible, then highly improbable.
- The world population stands at around 7.9 billion. But global internet user penetration is still only around 54%, according to the latest United Nations data. Many of these internet users — particularly in developing nations — rely exclusively on mobile phones for access, often limited to slower 2G and 3G networks.
- Then there are considerations for mobile users' interests and habits. Only around half of mobile app users play mobile games of any kind, according to TechCrunch data from 2019. Within that group of mobile gamers, consumer preference for gameplay and genre vary widely.
Playco is likely well aware of the challenges, but it nevertheless has its sights set on creating a billion-player game.
- Playco co-founder and CEO Michael Carter explained the company's approach in a conversation with Protocol: "Right now we're on an operational mission of trying to build a game that more than a billion people play. Our approach to that isn't just [that] we're going to put all our resources into building one big game. It's more [that] we have teams that go after these ideas to build game concepts and see how they work and take that learning and build on it with subsequent releases. So right now we're very, very committed to distribution platforms that can achieve very, very, very large audiences."
How soon could a billion-person game happen? Carter said: "It's probably going to be this year or next year that there's a game that goes from zero to 1 billion players in under a month using these new platforms."
- "That comes from our experience with being on these platforms already, and just seeing how fast the growth is," he added.
The platform for this billion-player game is "instant gaming," and it could enable games to go viral to an extent that simply hasn't been possible on traditional distribution channels. Instant gaming is a form of cloud gaming designed to work across platforms that people already use.
- Playco partners with Facebook, Snap, Line and other companies to integrate its games directly into their apps — players don't need to download any additional software before jumping into a game session.
- Instant gaming can scale faster because it integrates into social networks and has minimal friction in placing new players into a playing session.
- "Virality is not really possible as part of the product on mobile app stores as they exist today," Carter said. "But when you have this instant play, it's so easy to share and so easy to adopt. What we're seeing is the size of audiences [are] very quickly quite large."
Anyone can make bold proclamations, but Playco has so far backed it up. The company's games have collectively reached over 100 million players, attracting audiences across Asia, Europe and the U.S.
- Investors are also buying into the message. In September 2020, Playco raised $100 million in a series A funding round that valued the company just north of $1 billion. Investors included Sequoia Capital, Josh Buckley, Sozo Ventures and Caffeinated Capital, per The Wall Street Journal.
- It also helps that Playco is led by a team of industry veterans. Carter co-founded Playco alongside Zynga co-founder Justin Waldron, who now serves as president. Takeshi Otsuka — who previously led development for the Mobage platform — is Playco's third co-founder and executive producer. Most recently, Playco hired Calvin Grunewald, a former director of engineering at Facebook, as CTO.
One potential concern with Playco's business model is that it ultimately relies on a handful of tech behemoths for distribution. Partners such as Facebook and Snapchat hold so much market power that Playco might struggle to negotiate favorable distribution terms over the long term.
- But Carter doesn't share that concern. "Just in the U.S., you have scale with Facebook, with Snapchat, with TikTok, with Zoom, with Tinder," Carter said. "And that's just one country, I haven't even gotten to the global ecosystem of these different platforms. So our view is that actually there's never been a better time to be on the content side."
- Waldron doesn't share that concern, either, and thinks that Playco is filling a gap in content that the big platforms might never move to fill. "[Our partner's] platform offers us the ability to create these types of experiences for their users that we would have a very hard time creating outside of that context," Waldron said. "The platforms also feel like they could never go and create the types of content that we're going to go create … So in that sense, we're both adding a lot of value to the relationship."
— Hirsh Chitkara
"I come from mobile gaming, so we look at the number of ratings and reviews, and then try to extrapolate that to how much revenue is being generated. And fortunately, because of my portfolio … I have a lot of different data points, and I can come up with some kind of understanding of what the market looks like. Once Oculus put out their numbers, I was able to backtrack and see if this is actually accurate. And I was pleasantly surprised that I was fairly accurate." —VR Fund general partner Tipatat Chennavasin on how he evaluates VR companies.
- Chinese police and Tencent seized $46 million in assets during a bust of what they claim is "world's biggest" video game cheating operation. It made around $76 million in revenue.
- CD Projekt Red wants to be one of the world's top three gamemakers, according to its new strategy update. But investors weren't too thrilled on the news, with shares falling 15% after the company's announcement.
- Manticore Games raised $100 million in a series C. Investment in the Roblox-like platform, which is used to build and play games using Epic's Unreal Engine, was led by XN Ventures.
- Speaking of Epic Games, it's looking to raise $1.7 billion, sources told Bloomberg. That would value the company at $28 billion. And some of that cash would most likely go to funding its legal battles against Apple and Google.
- Chinese video-streaming platform Bilibili is investing $123 million in X.D. Network, the parent company of popular game-distribution platform TapTap. TapTap is seen as a competitor to the traditional game distributors in China, and makes its profits via ads.
- Tencent's Timi Studios generated revenue of $10 billion in 2020, Reuters reports, making it the world's largest developer. Timi is the studio behind Honor of Kings and Call of Duty: Mobile.
- Apple is expanding its Arcade subscription gaming service, which previously focused on exclusive titles, with a back catalog of classic App Store games.
- A popular Call of Duty: Warzone "cheat" is actually PC malware. Activision warned players that installing it allows hackers to take over their machine.
- GameStop will sell an additional 3.5 million shares, it announced Monday. Shares in the company plummeted as much as 16%, but rebounded a bit later in the day.
— Karyne Levy
Look out for
Kind of a big deal
For a handheld, I think the Nintendo Switch is quite large at almost 10 inches long. But to Michael Pick, it seems that 10 inches just isn't enough. So he built a Switch that's more than six times the size of the original, at 70 inches long. And it's playable! Of course he has to use his forearms to hit the A button, but that's a small price to pay for a Mario Kart session you can probably see from space. The best part: He's gifting it to St. Jude's Children's Hospital.
— Karyne Levy
Thanks for reading. Tell your friends and colleagues to subscribe here, and send tips, feedback and ideas to email@example.com. See you next week.