Inching Forward
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Last week the industry did not get much of a respite, as the space continued to deal with fallout from Unity’s pricing changes. Microsoft added its own bit of controversy with a massive data leak. September is turning out to be an eventful month:
- Unity amends its pricing model to deal with gamer outrage
- Microsoft finds itself at the center of a data leak
- CoD Warzone 1 shutdown raises question of item transfer
- Yuga Labs partners with Hadean
- Proof of Play raises $33M for on-chain gaming
- Mythical Games is bringing Blankos to mobile
Let’s dive in!
Unity Tries to Appease The Gamer Community
Unity has been dealing with the fallout of their unpopular Runtime Fee policy. Game developers were furious with the new policies, which were seen as life threatening for many studios. Last week the company published a letter announcing amendments to the new policies.
As it currently stands, Unity Personal will remain free, and those qualifying for the new runtime fee will get a choice of going with the fee or a 2.5% revenue share option. There were other accommodations announced, but it remains to be seen if the community will be appeased.
It may take more than a rollback to earn back game developers’ trust. In the meantime other engines will get more attention. Re-Logic, for example, is donating $200K to help with development of open source alternatives, but giants like Amazon should not be ignored.
Microsoft Deals With a Leak as Activision Blizzard Deal Gets Closer
Microsoft’s massive data leak, offered insights into the company’s plans and priorities. One thing of particular interest and concern was the giant’s interest in acquiring Valve and/or Nintendo. Consolidation in the gaming space has become alarming over the past years.
This comes as a backdrop to Microsoft reworking its proposed deal to buy Activision Blizzard. It looks as though the acquisition is likely to go through, even if it takes more time to overcome the regulators’ concerns.
We are seeing major tech players like Amazon and Netflix increasing their focus on gaming. Their budgets and IP portfolios make them difficult to compete with. Any additional consolidation in the space looks threatening for indie studios, and may be harmful to gamer rights.
CoD Items Will Not Transfer From Warzone 1 to Warzone 2
The shutdown of Warzone Caldera sparked a conversation about item transfers. As items and blueprints did not carry over, for many in the web3 it was an opportunity to raise awareness for items transferability that is often part of games utilizing web3 technology.
The web3 stack enables extensive decentralization of a gaming world, changing the roles of a studio from master to service provider. However, it is important not to lose sight of the difference between something that is programmatically enforced vs community supported.
For instance the statement: “Web3 community wouldn’t stand for this” distorts the argument. Gaming audiences can influence studios without web3 (see examples with Unity and RuneScape). Web3 is a technology that unlocks features, and not a business model or a genre.
Yuga Labs Partners With Hadean
We are very excited about our portfolio company, Hadean, partnering with Yuga Labs to help Otherside become a densely populated virtual world environment. MMOs have tremendous potential for showcasing the utility of web3 technology.
Part of the magic of certain experiences like concerts or ball games is the atmosphere created by the crowd. However, many MMOs cannot surpass 100–200 concurrent same space user-cap. Those that do, often do so by sacrificing collision and other immersive characteristics.
Hadean’s spatial technology is able to push the boundaries of concurrent virtual world existence. We expect this not only to enhance digital experiences, but also revolutionize game mechanics, and are looking forward to the next iterations of Otherside.
Proof of Play Raises $33M For On-chain Gaming
The round, led by a16z and Greenoaks, demonstrates that there is still investment interest in the gaming sector and that the on-chain gaming sector is heating up. On-chain gaming is seen by many as the long-term goal that may not yet be technologically viable for many studios.
However, development of infrastructure and frameworks is rapidly progressing across the space with Arbitrum being one of the prime destinations for on-chain gaming enthusiasts and builders. The autonomous world future may be a lot closer than many think.
Still, it may be further than many hope. The previous gaming cycle has shown that big early rounds can lead to challenges. Many studios looking for additional funding now face down rounds and restructuring. Gaming requires patience and it may be wise to temper expectations.
Mythical Games is Taking Another Title to Mobile
Mythical Games is taking its well known title, Blankos to mobile. Normally, a game launching a mobile version is not such a big deal, but this comes on the heels of the announcement of enabled NFT purchases for NFL Rivals.
With the recent policy changes at Google and the thawing around the Apple Store, it is critical to watch the changes around this landscape. Given the wider distribution for mobile and the often easier adoption path, mobile games utilizing web3 could be first to find publishing success.
Mythical Games has the budget and partnerships to make a serious attempt as far as user acquisition, and if nothing else could gather valuable data pertaining to conversion and retention metrics.
This wraps it up for this entry. As always, if you are working on something exciting in the web3 gaming space, or are a traditional gaming team looking to explore the possibilities, don’t hesitate to reach out to any of us at Sanctor Capital. Have a great rest of your week!
Ilya Abugov (@AbugovIlya)
Disclaimer: This commentary is not investment advice. It does not purport to include any recommendation as to any particular investment, transaction or investment strategy, or any recommendation to buy or sell any investment. It does not reflect any attempt to effect any transactions or render any investment advice.
This post is solely for informational and entertainment purposes. It is inherently limited and does not purport to be a complete discussion of the issues presented or the risks involved. Readers should seek their own independent legal, tax, accounting, and investment advice from professional advisors. The views reflected in this commentary are subject to change at any time without notice.
