Research Summary
This report covers the latest developments in the gaming industry, focusing on key players such as Nintendo, Unity, and Meta. It also highlights the unique distribution dynamics in India’s gaming market and the rise of alternative app stores. The report also includes fundraising announcements for various tech startups.
Key Takeaways
Nintendo’s Unusual Move
- No DLC for Zelda: Tears of the Kingdom: Nintendo announced that it will not release any DLC for its latest hit, which is an unusual move considering the company’s history of releasing DLCs for its games.
- Comparison with Previous Releases: For instance, Mario Kart 8, released in 2014, had an optional DLC for an additional 16 courses, and a second DLC pack was released eight years later in 2022.
- Possible Reasons: The decision might be due to the immediate commencement of Zelda: TotK’s development after the release of Zelda: BotW.
Unity’s Dominance in Mobile Gaming
- Unity SDK Usage: Despite disappointment regarding Unity’s Runtime Fee, 71% of the top mobile games use at least one Unity SDK.
- Revenue Impact: These games account for $16B in yearly revenue, translating to $400M in top line gross to Unity, assuming a Runtime Fee cap at 2.5%.
- Significance: This Runtime Fee represents a substantial increase in Unity’s annual revenue of $1.8B.
Meta’s Control Over Mobile Game Ad Networks
- Meta’s Ad Networks: Meta owns all four top ad networks for mobile games, making it significantly larger than its closest competitors.
- Impact of Apple’s IDFA Policy: Apple’s IDFA policy changes have had a material impact on Meta’s financials due to its dominance in the ad network space.
- Need for More Channels: The emergence of new ad networks on platforms like TikTok, Roblox, Prime Videos, and Netflix is exciting as it could provide more channels for User Acquisition (UA).
Meta’s Focus on Gaming for Meta Quest 3
- Meta Quest 3 Lineup: Meta unveiled the Meta Quest 3 lineup at its annual conference, Meta Connect, with a significant focus on games.
- Xbox Cloud Gaming: Xbox cloud gaming is one of the offerings on the Meta Quest 3 lineup.
- Release Details: The headset will be released on October 10th for $500 with 50 new games and 50 updated games from its catalog.
India’s Unique Distribution Dynamics
- Alternative App Stores: India’s gaming market is characterized by the presence of multiple alternative app stores such as Indus Appstore, Indus App Bazaar, mSeva, AndroBranch, and many more.
- Superapps: Superapps, which could be classified as pseudo app stores, are the norm in India.
- Mobile Gaming Dominance: 96% of all Indian gamers play on mobile, representing nearly all of the 450M Indian gamers.
Actionable Insights
- Investigate the Potential of DLCs: Given Nintendo’s unusual move of not releasing DLCs for its latest game, it might be worth exploring the impact of DLCs on game popularity and revenue.
- Assess the Impact of Unity’s Runtime Fee: With Unity’s Runtime Fee contributing significantly to its revenue, it’s crucial to understand its impact on game developers and the overall mobile gaming ecosystem.
- Explore Opportunities in Alternative Ad Networks: Given Meta’s dominance in mobile game ad networks, there could be opportunities in exploring alternative ad networks for UA.
- Monitor Developments in VR Gaming: With Meta’s focus on gaming for its Meta Quest 3 lineup, it’s important to keep an eye on developments in VR gaming.
- Understand India’s Gaming Market: Given the unique distribution dynamics in India’s gaming market, it’s crucial to understand the role of alternative app stores and superapps in user acquisition and retention.
