Tencent

The companies that will shape the upcoming multiverse era of social media

Posted by | augmented reality, epic games, Facebook, Gaming, Klang, Linden Lab, Mojang, multiverse, Northzone, Roblox, Singularity 6, Social, Tencent, Virtual reality, virtual worlds | No Comments

Throughout this series on the rise of multiverse virtual worlds, I have outlined the collision of gaming and social media into a new multiverse era of social media within virtual worlds due to technological and cultural changes. The result will be a healthier ecosystem of social media than what currently exists and the economic development of these virtual worlds such that many people turn to them as sources of income.

The critical question that remains in this final part of the series: Who will be the dominant companies of this multiverse era who build the most popular virtual worlds? Will one virtual world achieve a monopoly or will there be many worlds we hop between on a daily basis? Will the most influential company be the developer of a certain world or an infrastructure layer underpinning many worlds?

(This is the final column in a seven-part series about “multiverse” virtual worlds.)

There are three categories of competitors in position for this new stage: gaming incumbents, social media incumbents and new virtual world startups.

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Tencent to grow gaming empire with $148M acquisition of Conan publisher Funcom in Norway

Posted by | Apps, ceo, Companies, Europe, finland, Funcom, Fundings & Exits, Gaming, Israel, Microsoft, miniclip, Nintendo, online games, Oslo, Riot Games, smartphone, Software, Sony, supercell, Tencent, ubisoft, WeChat | No Comments

Tencent, one of the world’s biggest video and online gaming companies by revenue, today made another move to help cement that position. The Chinese firm has made an offer to fully acquire Funcom, the games developer behind Conan Exiles (and others in the Conan franchise), Dune and some 28 other titles. The deal, when approved, would value the Oslo-based company at $148 million (NOK 1.33 billion) and give the company a much-needed cash injection to follow through on its longer-term strategy around its next generation of games.

Funcom is traded publicly on the Oslo Stock Exchange, and the board has already recommended the offer, which is being made at NOK 17 per share, or around 27% higher than its closing share price the day before (Tuesday).

The news is being made with some interesting timing. Today, Tencent competes against the likes of Sony, Microsoft and Nintendo in terms of mass-market, gaming revenues. But just earlier this week, it was reported that ByteDance — the publisher behind breakout social media app TikTok — was readying its own foray into the world of gaming.

If it goes ahead, that would set up another level of rivalry between the two companies. Tencent also has a massive interest in the social media space, specifically by way of its messaging app WeChat . While many consumers will have multiple apps, when it comes down to it, spending money in one represents a constraint on spending money in another. ByteDance currently profits from having content on its social apps related to Tencent gameplay, so building its own content could be one way of moving away from that. The two have (naturally) also been battling it out in court in China over unfair competition claims, in part related to that gaming content.

Today, Tencent is one of the world’s biggest video game companies: in its last reported quarter (Q3 in November), Tencent said that it make RMB28.6 billion ($4.1 billion) in online gaming revenue, with smartphone games accounting for RMB24.3 billion of that.

Acquisitions and controlling stakes form a key part of the company’s growth strategy in gaming. Among its very biggest deals, Tencent paid $8.6 billion for a majority stake in Finland’s Supercell back in 2016. It also has a range of controlling stakes in Riot Games, Epic, Ubisoft, Paradox, Frontier and Miniclip. These companies, in turn, also are making deals: just earlier this month it was reported (and sources have also told us) that Miniclip acquired Israel’s Ilyon Games (of Bubble Shooter fame) for $100 million.

Turning back to Funcom, Tencent was already an investor in the company: it took a 29% stake in it in September 2019 in a secondary deal, buying out KGJ Capital (which had previously been the biggest shareholder).

“Tencent has a reputation for being a responsible long-term investor, and for its renowned operational capabilities in online games,” said Funcom CEO Rui Casais at the time. “The insight, experience, and knowledge that Tencent will bring is of great value to us and we look forward to working closely with them as we continue to develop great games and build a successful future for Funcom.”

In retrospect, this was laying the groundwork and relationships for a bigger deal just months down the line. 

“We have a great relationship with Tencent as our largest shareholder and we are very excited to be part of the Tencent team,” Casais said in a statement today. “We will continue to develop great games that people all over the world will play, and believe that the support of Tencent will take Funcom to the next level. Tencent will provide Funcom with operational leverage and insights from its vast knowledge as the leading company in the game space.”

The rationale for Funcom is that the company had already determined that it needed further investment in order to follow through on its longer-term strategy.

According to a statement issued before it recommended the offer, the company is continuing to build out the “Open World Survival segment” using the Games-as-a-Service business model (where you pay to fuel up with more credits); and is building an ambitious Dune project set to launch in two years.

“Such increased focus would require a redirection of resources from other initiatives, the most significant being the co-op shooter game, initially scheduled for release during 2020 that has been impacted by scope changes due to external/market pressures with increasingly strong competition and internal delays,” the board writes, and if it goes ahead with its strategy, “It is likely that the Company will need additional financing to supplement the revenue generated from current operations.”

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China Roundup: TikTok stumbles in the US and Huawei shipments continue to surge

Posted by | alibaba, Android, Ant Financial, Apple, Asia, Beijing, bytedance, China, China Roundup, daniel zhang, huawei, kunlun, musical.ly, smartphones, TC, Tencent, tiktok, WeChat, WeWork | No Comments

Hello and welcome back to TechCrunch’s China Roundup, a digest of recent events shaping the Chinese tech landscape and what they mean to people in the rest of the world. It’s been a very busy last week of October for China’s tech bosses, but first, let’s take a look at what some of them are doing in the neck of your woods.

TikTok’s troubles in the U.S.

The challenge facing TikTok, a burgeoning Chinese video-sharing app, continues to deepen in the U.S. Lawmakers have recently called for an investigation into the social network, which is operated by Beijing-based internet upstart ByteDance, over concerns that it could censor politically sensitive content and be compelled to turn American users’ data over to the Chinese government.

TikTok is arguably the first Chinese consumer app to have achieved international scale — more than 1 billion installs by February. It’s done so with a community of creators good at churning out snappy, light-hearted videos, highly localized operations and its acquisition of rival Musical.ly, which took American teens by storm. In contrast, WeChat has struggled to build up a significant overseas presence and Alibaba’s fintech affiliate Ant Financial has mostly ventured abroad through savvy investments.

TikTok denied the American lawmakers’ allegations in a statement last week, claiming that it stores all U.S. user data locally with backup redundancy in Singapore and that none of its data is subject to Chinese law. Shortly after, on November 1, Reuters reported citing sources that the U.S. government has begun to probe into ByteDance’s acquisition of Musical.ly and is in talks with the firm about measures it could take to avoid selling Musical.ly . ByteDance had no further comment to add beyond the issued statement when contacted by TechCrunch.

The new media company must have seen the heat coming as U.S.-China tensions escalate in recent times. In the long term, TikTok might have better luck expanding in developing countries along China’s Belt and Road Initiative, Beijing’s ambitious global infrastructure and investment strategy. The app already has a footprint in some 150 countries with a concentration in Asia. India accounted for 44% of its total installs as of September, followed by the U.S. at 8%, according to data analytics firm Sensor Tower.

lark

ByteDance is also hedging its bets by introducing a Slack-like workplace app and is reportedly marketing it to enterprises in the U.S. and other foreign countries. The question is, will ByteDance continue its heavy ad spending for TikTok in the U.S., which amounted to as much as $3 million a day according to a Wall Street Journal report, or will it throttle back as it’s said to go public anytime soon? Or rather, will it bow to U.S. pressure, much like Chinese internet firm Kunlun selling LGBTQ dating app Grindr (Kunlun confirmed this in a May filing), to offload Musical.ly?

Huawei is still selling a lot of phones

The other Chinese company that’s been taking the heat around the world appears to be faring better. Huawei clung on to the second spot in global smartphone shipments during the third quarter and recorded the highest annual growth out of the top-5 players at 29%, according to market analytics firm Canalys. Samsung, which came in first, rose 11%. Apple, in third place, fell 7%. Despite a U.S. ban on Huawei’s use of Android, the phone maker’s Q3 shipments consisted mostly of models already in development before the restriction was instated, said Canalys. It remains to be seen how distributors around the world will respond to Huawei’s post-ban smartphones.

Another interesting snippet of Huawei handset news is that it’s teamed up with a Beijing-based startup named ACRCloud to add audio recognition capabilities to its native music app. It’s a reminder that the company not only builds devices but has also been beefing up software development. Huawei Music has a content licensing deal with Tencent’s music arm and claims some 150 million monthly active users, both free and paid subscribers.

Co-living IPOs

danke apartment

China’s modern-day nomads want flexible and cost-saving housing as much as their American counterparts do. The demand has given rise to apartment-rental services like Danke, which is sometimes compared to WeLive, a residential offering from the now besieged WeWork that provides fully-furnished, shared apartments on a flexible schedule.

Four-year-old Danke has filed with the U.S. Securities and Exchange Commission and listed its offering size at $100 million, typically a placeholder to calculate registration fees. Backed by Jack Ma-controlled Ant Financial, the loss-making startup is now leasing in 13 Chinese cities, aggressively growing the number of apartments it operated to 406,746 since 2015. Its smaller rival Qingke has also filed to go public in the U.S. this week. Also operating in the red, Qingke has expanded its available rental units to 91,234 since 2012.

Apartment rental is a capital-intensive game. Services like Danke don’t normally own property but instead lease from third-party apartment owners. That means they are tied to paying rents to the landlords irrespective of whether the apartments are ultimately subleased. They also bear large overhead costs from renovation and maintenance. Ultimately, it comes down to which player can arrange the most favorable terms with landlords and retain tenants by offering quality service and competitive rent.

Also worth your attention

  • WeChat has been quite restrained in monetization but seems to be recently lifting its commercial ambitions. The social networking giant, which already sells in-feed ads, is expanding its inventory by showing users geotargeted ads as they scroll through friends’ updates, Tencent announced (in Chinese) in a company post this week.
  • Alibaba reported a 40% revenue jump in its September quarter, beating analysts’ estimates despite a cooling domestic economy. Its ecommerce segment saw strong user growth in less developed areas where it’s fighting a fierce war with rival Pinduoduo to capture the next online opportunity. Users from these regions spent about 2,000 yuan ($284) in their first year on Alibaba platforms, said CEO Daniel Zhang in the earnings call.
  • Walmart’s digital integration is gaining ground in China as it announced (in Chinese) that online-to-offline commerce now contributes 30% sales to its neighboorhood stores. Last November, the American retail behemoth began testing same-day delivery in China through a partnership with WeChat.

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Tencent to take 29% stake in multiplayer games maker Funcom

Posted by | Asia, China, dune, Europe, Funcom, Gaming, online games, Oslo, supercell, Tencent, video gaming | No Comments

Chinese social media and gaming giant Tencent is taking a 29% stake to become the largest shareholder in Oslo-based Funcom.

The indie games developer is responsible for multiple adaptations involving the “Conan the Barbarian” franchise, such as “Age of Conan” and “Conan Exiles,” as well as a number of other multiplayer titles — including a forthcoming open world sandbox game that will be set in the “Dune” sci-fi universe.

The news that Tencent has entered into a share purchase agreement to acquire almost a third of the company was announced in a press release today. The Chinese giant has agreed to acquire all the shares belonging to the Norway-based KGJ Capital AS, which is currently the largest shareholder in Funcom.

Commenting in a statement, Funcom CEO Rui Casais said: “Tencent has a reputation for being a responsible long-term investor, and for its renowned operational capabilities in online games. The insight, experience, and knowledge that Tencent will bring is of great value to us and we look forward to working closely with them as we continue to develop great games and build a successful future for Funcom.”

Tencent, which has a substantial games operation of its own, also holds stakes in a number of other major games makers — including Riot Games, Epic, Supercell, Ubisoft, Paradox, Frontier and Miniclip.

A prolonged games licensing freeze in China dented Tencent’s profits last year. And earlier this year, while it reported record profits in its Q1, it also recorded its slowest revenue growth since going public.

Regulatory risk at home is one reason for Tencent to expand its stakes in overseas games developers and tap into a global audience to stoke growth.

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Mobile gaming is a $68.5 billion global business, and investors are buying in

Posted by | apple music, applovin, Blackstone, Column, communications apps, computing, Electronic Arts, epic games, France, Gaming, Germany, Glu Mobile, ketchapp, KKR, Mobile, mobile devices, mobile game, niantic, pokemon, Riot Games, RSS, Seismic, Seismic Games, social media, Spotify, supercell, Sweden, TC, Tencent, ubisoft, United Kingdom, United States, voodoo, washington DC, White House, Zynga | No Comments
Omer Kaplan
Contributor

Omer Kaplan is CMO and co-founder at ironSource.
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By the end of 2019, the global gaming market is estimated to be worth $152 billion, with 45% of that, $68.5 billion, coming directly from mobile games. With this tremendous growth (10.2% YoY to be precise) has come a flurry of investments and acquisitions, everyone wanting a cut of the pie. In fact, over the last 18 months, the global gaming industry has seen $9.6 billion in investments and if investments continue at this current pace, the amount of investment generated in 2018-19 will be higher than the eight previous years combined.

What’s interesting is why everyone is talking about games, and who in the market is responding to this — and how.

The gaming phenomenon

Today, mobile games account for 33% of all app downloads, 74% of consumer spend and 10% of all time spent in-app. It’s predicted that in 2019, 2.4 billion people will play mobile games around the world — that’s almost one-third of the global population. In fact, 50% of mobile app users play games, making this app category as popular as music apps like Spotify and Apple Music, and second only to social media and communications apps in terms of time spent.

In the U.S., time spent on mobile devices has also officially outpaced that of television — with users spending eight more minutes per day on their mobile devices. By 2021, this number is predicted to increase to more than 30 minutes. Apps are the new prime time, and games have grabbed the lion’s share.

Accessibility is the highest it’s ever been as barriers to entry are virtually non-existent. From casual games to the recent rise of the wildly popular hyper-casual genre of games that are quick to download, easy to play and lend themselves to being played in short sessions throughout the day, games are played by almost every demographic stratum of society. Today, the average age of a mobile gamer is 36.3 (compared with 27.7 in 2014), the gender split is 51% female, 49% male, and one-third of all gamers are between the ages of 36-50 — a far cry from the traditional stereotype of a “gamer.”

With these demographic, geographic and consumption sea-changes in the mobile ecosystem and entertainment landscape, it’s no surprise that the game space is getting increased attention and investment, not just from within the industry, but more recently from traditional financial markets and even governments. Let’s look at how the markets have responded to the rise of gaming.

Image courtesy of David Maung/Bloomberg via Getty Images

Games on games

The first substantial investments in mobile gaming came from those who already had a stake in the industry. Tencent invested $90 million in Pocket Gems and$126 million in Glu Mobile (for a 14.6% stake), gaming powerhouse Supercell invested $5 million in mobile game studio Redemption Games, Boom Fantasy raised $2M million from ESPN and the MLB and Gamelynx raised $1.2 million from several investors — one of which was Riot Games. Most recently, Ubisoft acquired a 70% stake in Green Panda Games to bolster its foot in the hyper-casual gaming market.

Additionally, bigger gaming studios began to acquire smaller ones. Zynga bought Gram Games, Ubisoft acquired Ketchapp, Niantic purchased Seismic Games and Tencent bought Supercell (as well as a 40% stake in Epic Games). And the list goes on.

Wall Street wakes up

Beyond the flurry of investments and acquisitions from within the game industry, games are also generating huge amounts of revenue. Since launch, Pokémon GO has generated $2.3 billion in revenue and Fortnite has amassed some 250 million players. This is catching the attention of more traditional financial institutions, like private equity firms and VCs, which are now looking at a variety of investment options in gaming — not just of gaming studios, but all those who have a stake in or support the industry.

In May 2018, hyper-casual mobile gaming studio Voodoo announced a $200 million investment from Goldman Sachs’ private equity investment arm. For the first time ever, a mobile gaming studio attracted the attention of a venerable old financial institution. The explosion of the hyper-casual genre and the scale its titles are capable of achieving, together with the intensely iterative, data-driven business model afforded by the low production costs of games like this, were catching the attention of investors outside of the gaming world, looking for the next big growth opportunity.

The trend continued. In July 2018, private equity firm KKR bought a $400 million minority stake in AppLovin and now, exactly one year later, Blackstone announced their plan to acquire mobile ad-network Vungle for a reported $750 million. Not only is money going into gaming studios, but investments are being made into companies whose technology supports the mobile gaming space. Traditional investors are finally taking notice of the mobile gaming ecosystem as a whole and the explosive growth it has produced in recent years. This year alone mobile games are expected to generate $55 billion in revenue, so this new wave of investment interest should really come as no surprise.

A woman holds up her cell phone as she plays the Pokemon GO game in Lafayette Park in front of the White House in Washington, DC, July 12, 2016. (Photo: JIM WATSON/AFP/Getty Images)

Government intervention

Most recently, governments are realizing the potential and reach of the gaming industry and making their own investment moves. We’re seeing governments establish funds that support local gaming businesses — providing incentives for gaming studios to develop and retain their creatives, technology and employees locally — as well as programs that aim to attract foreign talent.

As uncertainty looms in England surrounding Brexit, France has jumped on the opportunity with “Join the Game.” They’re painting France as an international hub that is already home to many successful gaming studios, and they’re offering tax breaks and plenty of funding options — for everything from R&D to the production of community events. Their website even has an entire page dedicated to “getting settled in France,” in English, with a step-by-step guide on how game developers should prepare for their arrival.

The U.K. Department for International Trade used this year’s Game Developers Conference as a backdrop for the promotion of their games fund — calling the U.K. “one of the most flourishing game developing ecosystems in the world.” The U.K. Games Fund allows for both local and foreign-owned gaming companies with a presence in the U.K. to apply for tax breaks. And ever since France announced their fund, more and more people have begun encouraging the British government to expand their program, saying that the U.K. gaming ecosystem should be “retained and enhanced.” But, not only does the government take gaming seriously, the Queen does as well. In 2008, David Darling, the CEO of hyper-casual game studio Kwalee, was made a Commander of the Order of the British Empire (CBE) for his services to the games industry. CBE is the third-highest honor the Queen can bestow on a British citizen.

Over in Germany, and the government has allocated €50 million of its 2019 budget for the creation of a games fund. In Sweden, the Sweden Game Arena is a public-private partnership that helps students develop games using government-funded offices and equipment. It also links students and startups with established companies and investors. While these numbers dwarf the investment of more commercial or financial players, the sudden uptick in interest governments are paying to the game space indicate just how exciting and lucrative gaming has become.

Support is coming from all levels

The evolution of investment in the gaming space is indicative of the stratospheric growth, massive revenue, strong user engagement and extensive demographic and geographic reach of mobile gaming. With the global games industry projected to be worth a quarter of a trillion dollars by 2023, it comes as no surprise that the diverse players globally have finally realized its true potential and have embraced the gaming ecosystem as a whole.

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TikTok-parent is getting into mobile search

Posted by | Apps, Asia, Baidu, bytedance, China, Google, LinkedIn, Microsoft, Mobile, Tencent, tiktok, Toutiao, WeChat | No Comments

China’s ByteDance, which owns popular video sharing app TikTok, is already working to enter the smartphone business and the music streaming space. It appears the world’s most valued startup also has ambitions about developing its own search engine. Kind of.

A company spokesperson told TechCrunch on Thursday that it has introduced a search function in ByteDance’s Toutiao news app.

“The function is in line with Toutiao’s mission of ‘information creates value.’ Users can try the function in the app and provide feedback and suggestions on the new function,” the spokesperson said.

The search function gleans information from both content on Toutiao as well as the entire world wide web, TechCrunch understands.

From the looks of it, ByteDance’s current search functionality is more alike WeChat’s in-app search function than local giant Baidu’s or Google’s offering.

On WeChat, when a person looks up a keyword, they see news articles about that topic, followed by mentions of it from their friends. This is followed by random articles about the subject. When a user clicks on any of these article or news links, WeChat serves them the page through its in-app browser, giving them no option to leave the walled-garden.

The idea is to change the way people think about — and use — a search engine altogether. And in China, where apps such as WeChat and TikTok have gained gigantic reach on mobile, it seems logical to add all new functionalities within those apps.

ByteDance’s interest in a search engine became public on Wednesday after it published a recruitment post on its WeChat account. The startup said its “search engine” is aimed at “hundreds of millions of mobile users in China.”

“We will build a universal search engine with a better user experience from 0 to 1. Only you don’t want to search, there is no [info] you can’t find, because we can search the whole network,” the company said in the post.

According to the description in the listing, ByteDance has already hired people from other search engines such as Google, Baidu, Bing and 360.

An analysis of LinkedIn listings by TechCrunch found more than 100 people from Google, Microsoft and Baidu, many of whom worked around search divisions at the previous companies, have joined ByteDance in recent quarters.

ByteDance following Tencent’s WeChat model to create its alternate search business may add more worries to Baidu, which currently holds more than 75% of the search engine market in China, according to third-party web service StatCounter Global Stat. Microsoft’s Bing is also operational in the country, though its market share remains in the low-single digits. Google currently does not offer its search feature in China — though it has attempted to change that in recent months to no luck.

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Nintendo Switch might soon go on sale in China via Tencent

Posted by | Asia, Beijing, China, Entertainment, Gaming, Mario, Nintendo, Nintendo Switch, shanghai, Sony, Tencent | No Comments

After months of anticipation, Nintendo Switch is ready to shed more light on its China launch. The Japanese console giant and Tencent are “working diligently” to bring the Switch to the world’s largest market for video games, the partners announced on Weibo (the Twitter equivalent in China) today.

The pair did not specify a date when the portable gaming system will officially launch, as the government approval process can take months. But there are signs that things are moving forward. For example, Tencent has been given the green light to run a trial version of the New Super Mario Mario Bros. U Deluxe and a few other blockbuster titles in China.

On August 2, the partners will jointly host a press conference for Switch — no product launch yet — in Shanghai, Tencent confirmed to TechCrunch. It appears to be a strategic move that coincides with the country’s largest gaming expo China Joy beginning on the same day in the city.

Tencent and Nintendo are hosting a media event on August 2nd 2019 in Shanghai for Nintendo Switch.

Steven Ma, Senior Vice President of Tencent and Satoru Shibata, executive at Nintendo, will attend.

Should be more details of Switch launch in China. pic.twitter.com/MULC7jMSqg

— Daniel Ahmad (@ZhugeEX) July 24, 2019

Sales of Nintendo Switch in China, made possible through a distribution deal with Tencent, will likely add fuel to Nintendo’s slowing growth. It can also potentially diversify Tencent’s gaming revenues, which took a hit last year as Beijing tightened controls over online entertainment.

Switch faces an uphill battle as consoles, including Sony PS4 and Microsoft Xbox, have for years struggled to catch on in China. The reasons are multifaceted. China had banned consoles until 2014 to protect minors from harmful content. The devices are also much less affordable than mobile games, making it difficult as a form of social interaction in the mobile-first nation.

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The need-to-know takeaways from VidCon 2019

Posted by | Baidu, bytedance, Cargomatic, China, digital media, donald trump, DraftKings, events, Gaming, GGV, hans tung, Influencer Marketing, Kylie Jenner, Marketing, Media, musical.ly, new media, oprah winfrey, Singapore, social networks, Startups, STEM, synthetic media, TC, Tencent, tiktok, Twitch, Venture Capital, Video | No Comments

VidCon, the annual summit in Anaheim, CA for social media stars and their fans to meet each other drew over 75,000 attendees over last week and this past weekend. A small subset of those where entertainment and tech executives convening to share best practices and strike deals.

Of the wide range of topics discussed in the industry-only sessions and casual conversation, five trends stuck out to me as takeaways for Extra Crunch members: the prominence of TikTok, the strong presence of Chinese tech companies in general, the contemplation of deep fakes, curiosity around virtual influencers, and the widespread interest in developing consumer product startups around top content creators.

Newer platforms take center stage

GettyImages 1161447217

Photo by Jerod Harris/Getty Images

TikTok, the Chinese social video app (owned by Bytedance) that exploded onto the US market this past year, was the biggest conversation topic. Executives and talent managers were curious to see where it will go over the next year more than they were convinced that it is changing the industry in any fundamental way.

TikTok influencers were a major presence on the stages and taking selfies with fans on the conference floor. I overheard tweens saying “there are so many TikTokers here” throughout the conference. Meanwhile, TikTok’s US GM Vanessa Pappas held a session where she argued the app’s focus on building community among people who don’t already know each other (rather than being centered on your existing friendships) is a fundamental differentiator.

Kathleen Grace, CEO of production company New Form, noted that Tik Tok’s emphasis on visuals and music instead of spoken or written word makes it distinctly democratic in convening users across countries on equal footing.

Esports was also a big presence across the conference floor with teens lined up to compete at numerous simultaneous competitions. Twitch’s Mike Aragon and Jana Werner outlined Twitch’s expansion in content verticals adjacent to gaming like anime, sports, news, and “creative content’ as the first chapter in expanding the format of interactive live-streams across all verticals. They also emphasized the diversity of revenue streams Twitch enables creators to leverage: ads, tipping, monthly patronage, Twitch Prime, and Bounty Board (which connects brands and live streamers).

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App revenue tops $39 billion in first half of 2019, up 15% from first half of last year

Posted by | analyst, android apps, app revenues, app stores, app-store, Apple, Apps, China, Google Play, instagram, iOS App Store, iOS apps, Mobile, mobile applications, mobile apps, mobile games, Netflix, online marketplaces, sensor tower, smartphones, streaming services, Tencent, tiktok, Tinder | No Comments

App store spending is continuing to grow, although not as quickly as in years past. According to a new report from Sensor Tower, the iOS App Store and Google Play combined brought in $39.7 billion in worldwide app revenue in the first half of 2019 — that’s up 15.4% over the $34.4 billion seen during the first half of last year. However, at that time, the $34.4 billion was a 27.8% increase from 2017’s numbers, then a combined $26.9 billion across both stores.

Apple’s App Store continues to massively outpace Google Play on consumer spending, the report also found.

In the first half of 2019, global consumers spent $25.5 billion on the iOS App Store, up 13.2% year-over-year from the $22.6 billion spent in the first half of 2018. Last year, the growth in consumer spending was 26.8%, for comparison’s sake.

Still, Apple’s estimated $25.5 billion in the first half of 2019 is 80% higher than Google Play’s estimated gross revenue of $14.2 billion — the latter a 19.6% increase from the first half of 2018.

The major factor in the slowing growth is iOS in China, which contributed to the slowdown in total growth. However, Sensor Tower expects to see China returning to positive growth over the next 12 months, we’re told.

To a smaller extent, the downturn could be attributed to changes with one of the top-earning apps across both app stores: Netflix.

Last year, Netflix dropped in-app subscription sign-ups for Android users. Then, at the end of December 2018, it did so for iOS users, too. That doesn’t immediately drop its revenue to zero, of course — it will continue to generate revenue from existing subscribers. But the number will decline, especially as Netflix expands globally without an in-app purchase option, and as lapsed subscribers return to renew online with Netflix directly.

In the first half of 2019, Netflix was the second highest earning non-game app with consumer spending of $339 million, Sensor Tower estimates, down from $459 million in the first half of 2018. (We should point out the firm bases its estimates on a 70/30 split between Netflix and Apple’s App Store that drops to 85/15 after the first year. To account for the mix of old and new subscribers, Sensor Tower factors in a 25% cut. But Daring Fireball’s John Gruber claims Netflix had a special relationship with Apple where it had an 85/15 cut from year one.)

In any event, Netflix’s contribution to the app stores’ revenue is on the decline.

In the first half of last year, Netflix had been the No. 1 non-game app for revenue. This year, that spot went to Tinder, which pulled in an estimated $497 million across the iOS App Store and Google Play, combined. That’s up 32% over the first half of 2018.

1h 2019 app revenue worldwide

But Tinder’s dominance could be a trend that doesn’t last.

According to recent data from eMarketer, dating app audiences have been growing slower than expected, causing the analyst firm to revise its user estimates downward. It now expects that 25.1 million U.S. adults will use a dating app monthly this year, down from its previous forecast of 25.4 million. It also expects that only 21% of U.S. single adults will use a dating app at all in 2019, and that will only grow to 23% by 2023.

That means Tinder’s time at the top could be overrun by newcomers in later months, especially as new streaming services get off the ground (assuming they offer in-app subscriptions); if TikTok starts taking monetization seriously; or if any other large apps from China find global audiences outside of China’s third-party app stores.

For example, Tencent Video grossed $278 million globally in the first half of 2019, outside of the third-party Chinese Android app stores. That made it the third-largest non-game app by revenue. And Chinese video platform iQIYI and YouTube were the No. 4 and No. 5 top-grossing apps, respectively.

Meanwhile, iOS app installs actually declined in the first half of the year, following the first quarter that saw a decline in downloads, Q1 2019, attributed to the downturn in China.

The App Store in the first half of 2019 accounted for 14.8 billion of the total 56.7 billion app installs.

Google Play installs in the first half of the year grew 16.4% to 41.9 billion, or about 2.8 times greater than the iOS volume.

1h 2019 app downloads worldwide

The most downloaded apps in the first half of 2019 were the same as before: WhatsApp, Messenger and Facebook led the top charts. But TikTok inched ahead of Instagram for the No. 4 spot, and it saw its installs grow around 28% to nearly 344 million worldwide.

In terms of mobile gaming specifically, spending was up 11.3% year-over-year in the first half of 2019, reaching $29.6 billion across the iOS App Store and Google Play. Thanks to the fallout of the game licensing freeze in China, App Store revenue growth for games was at $17.6 billion, or 7.8% year-over-year growth. Google Play game spending grew by 16.8% to $12 billion.

The top-grossing games, in order, were Tencent’s Honor of Kings, Fate/Grand Order, Monster Strike, Candy Crush Saga and PUBG Mobile.

1h 2019 game revenue worldwide

Meanwhile, the most downloaded games were Color Bump 3D, Garena Free Fire and PUBG Mobile.

Image credits: Sensor Tower

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Northzone’s Paul Murphy goes deep on the next era of gaming

Posted by | Amazon, Angry Birds, Candy Crush, Electronic Arts, esports, Gaming, Google, King, league of legends, Media, mobile gaming, Netflix, Nintendo Switch, Paul Murphy, Rovio, Sports, stadia, Startups, Steam, supercell, Talent, TC, Tencent, unity-technologies, Venture Capital, Virtual reality | No Comments

As the gaming market continues to boom, billions of dollars are being invested in new games and new streaming platforms vying to own a piece of the action. Most of the value is accruing to the large incumbents in a space, however, and the entrance of Google and other big tech companies makes it difficult to identify where there are compelling opportunities for entrepreneurs to build new empires.

TechCrunch media analyst Eric Peckham recently sat down with Paul Murphy, Partner at European venture firm Northzone, to discuss Paul’s view of the market and where he is focusing his dollars. Below is the transcript of the conversation (edited for length and clarity):


Eric Peckham: You co-founded the hit mobile game Dots before moving to London and joining Northzone last year. Are you still bullish on investment opportunities in mobile gaming or do you think the market has changed?

Paul Murphy: I’m bullish on mobile gaming–the market is bigger than it has ever been. There’s a whole generation of people that have been trained to play games on mobile phones. So those are things that are very positive.

The challenge is you don’t really have a rising tide moment anymore. The winners have won. And so it’s very, very difficult for someone to enter with new content and build a business that’s as big as Supercell or King, regardless of how good their content is. So while the prize for winning in mobile gaming content big, the likelihood is smaller.

Where I’m spending most of my time is not on content, it’s on components within mobile gaming. We’re looking at infrastructure: different platforms that enable mobile gaming, like Bunch which we invested in.

Their product allows you to do live video and audio on top of mobile games. So we don’t have to take any content risk. We’re betting that this great product will fit into a large inventory ecosystem.

Peckham: New mobile game studios that are launching all seem to fall under the sphere of influence of these bigger companies. They get a strategic investment from Supercell or another company. To your point, it’s tough for a small startup to compete entirely on its own.

Murphy: It’s possible in mobile gaming still but it’s really, really hard now. At the same time, what you’ve seen is the odds of winning are lower. It is hard to reach the same scale when it costs you $5.00 to acquire a user today, whereas when Candy Crush launched, it was $0.05 per user. So it’s almost impossible to achieve King-like scale today.

Therefore, you’re looking at similar content risk with reduced upside, which makes that equation less attractive for venture capital. But it might be perfectly fine for an established company because they don’t need to do the marketing, they have the audience already.

The big gaming companies all struggle with the challenge of how to create the next hit IP. They have this machine that can bring any great game to market efficiently, with a large audience they can cross promote from and capital they can invest to build a big brand quickly. For them, the biggest challenge is getting the best content.

So it’s natural to me that the pendulum has swung towards strategic investors in mobile gaming content. Epic has a fund that they set up with Improbable, Supercell is making direct investments, Tencent has been making investments for years. Even from a content perspective, you’re probably going to see Apple, Google, and Amazon making more content investments in mobile gaming.

Image via Getty Images / aurielaki

Peckham: Does this same market dynamic apply to PC games and console games? Do you see a certain area within gaming where there’s still opportunity for independent startups to create the game itself and find success at a venture scale?

Murphy: The reason we made our investment in Klang Games, which is building an MMO called Seed that people will primarily play through PC, is that while there is content risk–you’re never going to get rid of the possibility that the IP doesn’t fly–if it works, it will be massive…an Earth-shattering level of success. If their vision comes to life, it will be very, very big.

So that one has all the risks that you’d have in any other game studio but the upside is exponentially larger, so the bet makes sense to us. And it so happens that it’s going to be on PC first, where there’s certainly a lot of competition but it’s not as saturated and the monetization methods are healthier than in mobile gaming. In PC, you don’t have to do free-to-play tactics that interfere with the gameplay.

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