Sega's $776M Rovio bid
Prickly critters team up in tough mobile market
The SuperJoost Playlist is a weekly take on gaming, tech, and entertainment by business professor and author, Joost van Dreunen.
Here’s a life hack.
When jetlagged in the Netherlands, go see the late-evening showing at the cinema closest to your hotel.
Last week, the ten-year-old and I saw The Super Mario Bros. Movie at 10 o’clock at night. The kid had soda and popcorn. Dad drank beer. We had the best time. Going to the movies was just as they said it would be in the movies: magical.
The film itself is deeply predictable and pays homage to all of the fan-favorite features. There are references to the Nintendo franchise flywheel in every frame. It’s a buffet of fun set in a more contemporary context that does away with the damsel in distress narrative. Mario is flawed but his nemesis Bowser even more so, allowing the clumsy plumber to, ultimately, save the day. Nothing unexpected here.
What was unanticipated, however, was how many people seemed surprised by another video game adaptation making box office history. Really? Is it still that strange for a now four-decade-old powerhouse franchise to appeal to so many people? The entire franchise has sold over 800 million copies. What would be truly surprising is if it didn’t sell a few movie tickets. Nevertheless, professional film critics weren’t having any of it. And now the movie has already generated over $700 million at the box office.
Its theme song, Peaches, performed by Jack Black has entered number 83 in Billboard’s Top 100 and is eligible for Oscars Best Original Song. And yet, cultural gatekeepers continue to be baffled. Even after TLoU on HBO. Whatever man. Go film yourself.
Walking out into the Amsterdam night after the movie, the kid grabbed my hand and said: “That was awesome, Dad.”
It really, really was for me, too.
On to this week’s update.
Lina Khan answers spicy question
During a Congressional hearing this week, Tenessee representative Diana Harshbarger pointed out to the chair that “remarkably the FTC has sided with Sony.” Khan didn’t flinch, of course, and reminded Harshbarger that while the regulator benefits from hearing other market participants, including big ones, it ultimately makes its own independent judgments “based on the law and the facts.”
Speaking of judgments, the UK’s Competition and Markets Authority is expected to release its final decision any day now. When I spoke to Xbox CFO Tim Stuart during a fireside at MIT two weeks ago, he was unable to share much, of course. But he did seem to agree with my buddy Joost Rietveld’s recent submission that cloud gaming is not a distinct market.
Succinctly, Rietveld argues that it is unclear whether the cloud should be considered a distinct market, and that the CMA’s decision to block MSFT/ATVI depends on how it defines the market. He identifies four types of cloud gaming services that use cloud streaming technology in a variety of ways and target different customer segments.
It’s worth a read. But, put briefly, in the absence of a clear, singular market definition, it makes no sense for the CMA to block the proposed deal. And since all the relevant Joosten agree, I continue to be confident the deal will go through.
Bonus: Imagine getting grilled in Congress by someone named Harshbarger. Brrr.
Sega to buy Rovio for $776 million
The well-known Japanese publisher announced its bid to take over Finnish game maker Rovio earlier this week, stating that “through a combination of both companies' brands, characters, fanbase, as well as corporate culture and functionality, there will be significant synergies created going forward.”
At €706 million, Sega Sammy is offering slightly more than the previous €683 million offer from Playtika, which has since bled out. I previously predicted Rovio would sell this year, and did a full write-up on why Playtika’s offer was a challenging one. However, Sega appears to be a much better fit. Even so, the offer is still lower than Rovio’s IPO value in 2016 on the wings of its theatrical release of The Angry Birds Movie which generated $352 million at the box office. (BTW, that’s half of what the Super Mario movie has made so far. Just saying.)
Consolidation in the video games industry continues as marketing in the mobile segment is increasingly costly and consumer spending remains sluggish. The impact of platform privacy and IDFA deprecation weigh on the mobile gaming industry as they have resulted in reduced quality and quantity of downloads, as well as lower revenue growth. Popular categories all suffer alike as strategy, RPG, Match-3, casino, and shooter games show significant declines, and analysts predict a rough few years ahead with contraction between five to ten percent annually. Bringing well-known intellectual properties together under one roof will go a long way toward offsetting the costs of discovery and maintaining an active player base.
Rovio’s share price has shot up from $6.14 in early January when it received Playtika’s offer to $10 per share at closing on the Sega announcement.
Designing for aging gamers
This week America’s Association of Retired Persons, the AARP, hosted a gaming conference. Headlined by industry icon Trip Hawkins, it featured several panels and research talks about how to best develop games for aging players.
The AARP also published a report with recommendations on how to best design for older gamers. The study identified five segments of 50-plus gamers, including Dabblers, Mainstream Players, Indulgers, Enthusiasts, and Immersives. The numbers on this market remain modest. There are 52.4 million gamers aged 50-plus, who play an average of 12 hours per week and spend only about $8 a month for an estimated total of $5 billion spending on content, accessories, and hardware.
The thesis is self-evident. As the gaming audience ages, designing for this demographic will become a more common business strategy. As usual, a few indies are already hard at work like Later Daters by Bloom Digital, even as the industry continues to focus on ever younger players. If interactive entertainment is now mainstream, it will also have to cater to people later in life.
Or, more to the point, you know damn well you won’t be able to keep up with those whippersnappers playing VALORANT soon. What will you play then?
Pass. The word ‘phygital’ continues to be one of my very least favorite words and should be outlawed for eternity.