New party. Who dis?
Gaming as a broader vernacular to reach voters.
Let’s get ahead of ourselves for a minute.
Alexandria Ocasio-Cortez is going to be the next president of the United States.
You heard it here first. And the reason is simple: she brings a positive message that speaks to the needs of people in a language they can understand.
Central is Ms. Ocasio-Cortez’ ability to leverage the full strength of social media. Over the weekend she’s managed to push out a few zingers that really seemed to especially resonate with, you guessed it, gamers.
First she provided some much-needed clap-back when Joe Lieberman, a former Democratic Senator and the guy who tried to have video games banned back in 1983, tweeted that he didn’t think @AOC was the future. She replied: “New party. Who dis?”
Next was her response to New York Magazine publishing the results of poll that 45% of self-identified Republicans approved of her 70% top marginal tax rate: “All your base (are) belong to us.”
Finally she made an appearance on H.bomberguy’s Twitch stream to raise awareness for transgender kids.
Both her message and delivery are on point.
Connecting with voters because of an affinity and aptitude for a newly emerging media is not a historical novelty for politicians. John F. Kennedy got out ahead of Nixon because he came across much better on TV. Similarly, in Obama’s lead-up to the presidency he proved much more successful in communicating his message via the internet.
My office has been a non-stop Smash Brothers circus since it came out. The game has become the hearth of our workplace. So if you thought Fortnite was a powerful phenomenon (or as some of my colleagues call it: “crack”), then imagine the raw untapped energy waiting to be refined by a witty politician who gives a sh!t.
Gaming, it would seem, is now part of the broader vernacular that politicians use to connect with people. For years we’ve been designing ‘serious games’. Perhaps now everyone else will start to take games more seriously.
It’s got my vote.
On to this week’s update.
NEWS
Netflix fears Fortnite
In a recent shareholder letter its CEO reminded everyone that instead of competing directly with television or movie theater attendance, Netflix sees its rivals in any application or entertainment service that claims eyeballs. His key phrase was: “We compete with (and lose to) Fortnite more than HBO.” That’s pretty remarkable considering HBO is consistently mentioned as its #1 competitor. Moreover, it speaks to Netflix’ understanding of the contemporary entertainment landscape or, conversely, how archaic the approach by many of the traditional incumbents is. HBO continues to compete on quality which is nice and good. But its biggest seller Game of Thrones is teetering out as we still have to wait until April for what is likely to be the most underwhelming season anyway. Even so, Netflix recently raised its monthly subscription price to pay for its content binge. The company added 8.8MM subscribers in 18Q4 (+34% y/y). Link
NetEase, Tencent still getting screwed
The Chinese government posted a list of 93 titles that are now approved for its domestic market, making the total 257 since March. The Chinese Communist Party’s propaganda department (rly tho) runs the department in charge of approvals and has been restructuring it for almost a year now. Since it has resumed its duties in December, neither Tencent or NetEase have had any of its titles approved because the department approves them in the order they are received. No doubt that this explains their dwindling stock price as both firms look for alternative revenue streams and ways to get some of their capital governed elsewhere. Through 2018 Tencent made 149 investments, mostly in entertainment businesses. The overall drying up of venture money, China’s so-called “capital winter,” means that Tencent has reduced it dealmaking activity and could really use some of that PUBG and Fortnite shmoney. Link
Valve’s Artefact comes, goes
After quite a while of waiting and growing anticipation Valve’s recent release basically tanked. That is remarkable for two reasons: first, the collectible card game category is doing well so it is not for lack of momentum. Moreover, even Wizards of the Coast seems to have (finally) found its groove and Magic: The Gathering Arena is performing well. Second, Valve’s Steam platform should, ostensibly, give the firm unparalleled insight into what does and doesn’t work. Mr. Newell himself admitted a long time ago that “data is easy but insights are hard” so I guess Valve is suffering from a lack of insight. Seriously though, my five-year old could have told them that pay-to-win ($20 at the door and no way to earn new cards in-game) is old-fashioned. I get that they’re looking to get in on the secondary market but you have to build a player base first. Add this to the brewing Store Wars™ with Epic and Discord, and we may begin to wonder if Valve has grown too big to succeed. Link
Nexon is up for sale
Its founder Kim Jung-ju is looking to unload his 98.64% stake in the firm to the tune of $9bn. The firm brings in well over $200MM a month across all of its free-to-play PC titles. Top earner Dungeon Fighter Online was the second-highest grossing title last year that no one knows about. Considering the deal value there are only a few eligible firms including Tencent, NetEase, Disney, and Activision if we’re going purely on the theory that everyone is looking to build out their content portfolio. I think it’s a stretch because it’s a lot of money and it mostly buys you a stake in a market that many of those firms little about. Conversely, Nexon’s non-domestic earnings are small, hovering between 10-15% annually. Best guess is Tencent because of my previous comments, but not at that price. Link
Walmart going after esports
Competitive gamers everywhere are taking a long hard look in the mirror this week as they realize where they sit on the ‘cool scale.’ Walmart has teamed up with Esports Arena to “launch arenas within Walmart stores” in what is undoubtedly a full-scale effort based on archaic consumer tropes. Link
Microsoft lays out foundation of its gaming ambitions
Its CEO spoke about a bunch of stuff with a gaggle of journalists last week and laid out some of his vision on how Microsoft can play a significant part in the games market to come. The short of it is this: Microsoft is quickly developing an affinity for subscription revenue. You’re going to hear me say this constantly from here on but every tech firm has by now figured out that recurrent revenue gets you a much, much higher stock valuation than one on an EBITDA basis. And so Microsoft is moving full steam into developing cloud services, cross-platform functionality and what it calls a “Netflix for games.” Link
RIGHT QUICK TIDBITS
Niantic raises $245MM at $4bn valuation.
Bitkraft raises $125MM VC fund.