Monetizing Attention
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Last week was a busy one for gamers with TwitchCon, Faze Clan and Netflix grabbing headlines. Games have been able to capture the attention of 3B people, but now companies have to figure out how to keep them engaged and how to monetize their presence:
- Twitch announces simulcasting at TwitchCon
- Netflix wants GTA and raises prices
- Faze Clan is acquired by Gamesquare
- EA FC 24 bug shakes the competitive scene
- Sales of new titles are down in Europe for big franchises
- Elden Ring launches into fashion
Let’s dive in!
TwitchCon Brings Welcome Change
Twitch announced a number of new features and improvements at its recent conference. Among these were channel-level chat warnings and smart detection to help with moderation. However, the most talked about change was simulcasting.
Now streamers will be able to maximize the impact of their content. Twitch has been losing creators to competitors like Kick because of their stringent policies, so this change shows a willingness to listen to the needs of their users.
With 140M MAU, Twitch is a content platform giant, but it cannot rest on its laurels. It has to continue to improve the experience for the creators and their audiences amid revenue pressure in order to maintain its users.
Netflix May be Looking at GTA For a Gaming Push
I’ve written a lot about Netflix’s efforts to establish a gaming footprint. It may be that a GTA title may be on the horizon for the company. While this is currently mostly rumor and conjecture it would make sense. Netflix needs something to make users take its game library seriously.
The speculation comes amid another price hike for the streaming service. While this appears to be a strategy aimed at increasing ad revenue, the company needs to justify the new price points to consumers. Users have a lot of options with competition heating up in the content space.
Netflix looks to be betting on games to bolster the value of its IP portfolio. However, with gaming being a hit-or-miss path, and the development cycle, especially for premium titles, being long, it remains to be seen if Netflix executives have the patience to stick with it.
Gamesquare Acquires Faze Clan
The $17M all stock deal, marks the end of a troubling chapter for the embattled esports brand. After being valued north of $725 during the peak of esports-business hype, the company was shaken by a multitude of PR scandals and atrocious financial management.
The acquisition is in line with the overall consolidation around esports. Top players are taking advantage of the challenging economic environment to acquire talent and expand market reach at very deep discounts.
Faze Clan is a cautionary tale that teaches that flare and social clout cannot replace sound business fundamentals. The web3 industry has seen similar stories play out over multiple cycles with lambo memes leading to desolation. Hopefully, a lesson has been learned.
EA FC 24 Bug Shakes The Competitive Scene
The game bug in FC 24 was so egregious, it merited its own section. There are plenty of videos available from content creators depicting them using the Trickster+ move to attach the ball to the back of a player’s foot and literally run into the goal.
Understandably, this has resulted in chaos at the competitive level and EA suspended the functionality until it is fixed. It is an unfortunate misstep for a famous franchise in the middle of a massive marketing revamp.
I wanted to highlight this issue because QA and testing has not been receiving its due attention in the web3 space. DeFi builders learned the hard way the need for proper audits. Given the limited rollback options for an open economy, it’s important for studios to take testing seriously.
Games Sales Down in Europe
Game Sales Data is showing lower post launch numbers for premium titles FC 24, NBA 2K24 and Mortal Kombat 1 compared to the previous entries of the respective franchises. Given the rising cost of game development this is worrisome.
The difficult economic situation in Europe could be impacting discretionary spending and affecting game sales. Part of the challenge may be the lack of perceived substantial improvement between titles, making it harder for people to justify additional spending.
The saturation and tightening budgets in developed markets are pushing studios to further explore developing markets. However, there studios must navigate the challenges of lower specification hardware as well as lower LTV numbers.
Elden Ring Collaboration Highlights Fashion Opportunities
The Lands Between Collection from ARK/8 brings the fashion from the gaming universe to the physical world. This is not the first such endeavor, as Diablo IV also inspired a collection earlier, so perhaps we are starting to see early signs of a trend.
Apparel companies already use games to test out products with prospective consumers, so it is not a surprise to see game fashion start to spill over into the physical world just as physical products are getting digital counterparts.
The more gamers spend time in virtual worlds the more their appearance may matter to them, and perhaps the more they will want to extend it to the physical world. Physical-digital experience should only become more popular, as exemplified by the recent IYK raise.
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.
