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It’s been a big week for competitive play.
The announcement that sports betting will soon be legal has a lot of people excited.
If there’s one thing I’ve learned about American sports culture is that it involves more legalese and a lot more math. The latter provides reams of trivia about individual player performance, for instance, which all finds its way into a range of cultural practices varying from fantasy football to gambling. That last one is about to go legit, following a court ruling this week. Not surprisingly, sports leagues and betting firms are excited: the current market for illegal and off-shore betting is valued at $150 billion.
Next, EA reported its earnings and came out on top: its FIFA Ultimate Team carried it past analyst expectations and built expectations now that both Tencent and Nexon are cued up to release FIFA Online 4 in their respective markets China and Korea. Online viewership looks promising, too: FIFA 18 had 27MM viewers on Twitch (compare 14MM for NBA 2K18) in its launch month.
And finally don’t forget Riot receiving a Sports Emmy for Outstanding Live Graphic Design. (If you haven’t seen it, you should.) It’s a fantastic display that mixes different layers of technology and entertainment, and presents an interpretation of what games can be. Beyond solo campaigns and online multi-player, there’s enough of an audience out there now to warrant the investment in live events, provided, of course, that you do them well.
Accepting the award for Riot was Ariel Horn. He and I spoke a few years ago. As one of the precious few Riot folks based in New York he’s truly one of the pioneers. Previously having worked at Blizzcon, he spent the last nine years trying to tell the story of esports. He’s also the one who gave me the phrase that “esports was in the leather helm stage.”
In the flurry of news around new market potential, licensing updates, and industry awards, please remember that games alone are not interesting. It’s the players that give it life.
On to this week’s update.
NEWS
Researchers got some AI to make levels for DOOM
This notion of being replaced by robots is at first glance a threatening idea, of course, for anyone. In this case that only applies if you’re an expert: the researchers conclude their AI could someday serve as “a viable alternative to classical procedural generation.” Nevertheless, it’s only fair that automation and AI affects all manner of employment equally. I, for one, welcome our new robot overlords. Link
IAB finds that 59% of digital ad budgets goes to video
Pivoting to video has transcended cliché and is just how marketers do their jobs now. In their annual study the organization reported a record year in 2017 with $88 billion in digital ad spend in the US alone. Mobile is now the big kahuna, claiming $49.9bn of the total. According to one of the underwriters, the growth in mobile digital ad spend is in response to “consumer’s never-ending demand for sight, sound, and motion” which really is just a bunch words that carry absolutely no meaning. What people want is content. Not ads. They put up with ads. In fact, I propose re-phrasing the press release to say “Consumers now tolerate $50bn worth of interruptions by commercial video messages on their mobile device.” Link
Oh no Moviepass!
It’s been a sweet ride, I suppose. But when a recent SEC filing made its way to the newsroom, it looked to some like the curtains might soon fall for MoviePass. It’s been spending a lot of money on buying tickets in bulk to allow it subscribers to pay a fixed subscription fee. In fact, they’ve been lowering the price and expanding the value of the subscription over the last few months, which is a really aggressive acquisition strategy considering there are no natural enemies. Somewhere between the cost of doing business and the inability to monetize the data effectively, MoviePass is within an inch of its life. But its main shareholder is not worried and says they have enough cash for another 17 months.
Meanwhile, box office sales are fine. Yes, of course Black Panther and Avengers: Infinity War are a huge hit. And at AMC (the largest movie theater chain in the world, owned by Wanda Group) showed first signs of recovery at earnings last week. Looks like this might be a marquee year for the cinema. Link
Romanian hacker jailed for attacking WoW servers
After his extradition Calin Mateias last year was ordered to pay Blizzard about $30,000 as compensation to fix the attack. And he’s going to jail for one year. According to the DoJ, Mateias “prevented some paying customers from accessing the game.” Seems excessive. Link
Comcast offers $2.5bn break fee to 21st Century Fox
As the media industry’s move to consolidation gains momentum, expect the bids to get higher. When Comcast first approached Fox in November it did not include a break fee (an agreed amount in case a proposed acquisition runs into legal trouble and can’t proceed), but musical chairs isn’t for the faint of heart. In trying to outdo Disney’s bid of $52bn, Comcast is now offering $60bn as the Murdoch seeks to solidify its legacy. Something tells me that money won’t be a strong motivator for them, but rather a ‘nice to have’ considering that any acquisition of Fox depends to a large degree on whether or not the FCC will allow AT&T’s purchasing of Time Warner. Link
MONEY, MONEY, NUMBERS
Electronic Arts (EA): Revenue was $1,255MM for the quarter, with Live Services accounting for $679MM and up +31% y/y. Overall the publisher has managed to adapt well to the new digital environment, at least enough to beat analyst expectations and convince them of sufficient upside for the remainder of the year. Two highlights: (1) Tencent is going to release FIFA Online 4 and a mobile version of the game shortly, and (2) a Dutch sports commentator ran his mouth (as they tend to do) and inadvertently revealed that EA had, in fact, scooped up the UEFA Championship license that Konami relinquished just a few weeks ago.
Konami (TYO:9766) : It's always nice to report record-breaking earnings. For its fiscal year ending on March 31, the Japanese publishers clocked in at $2.19bn, up +4.9% y/y. About half of that comes from its Digital Entertainment division. What's strange is that Konami credits Pro Evolution Soccer: 2018 with driving its success in North America (see above). Link
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