Welcome back to ThisWeek in Apps, the Extra Crunch series that recaps the latest OS news, the applications they support and the money that flows through it all.
The app industry is as hot as ever with a record 204 billion downloads in 2019 and $120 billion in consumer spending in 2019, according to App Annie’s recently released “State of Mobile” annual report. People are now spending 3 hours and 40 minutes per day using apps, rivaling TV. Apps aren’t just a way to pass idle hours — they’re a big business. In 2019, mobile-first companies had a combined $544 billion valuation, 6.5x higher than those without a mobile focus.
In this Extra Crunch series, we help you keep up with the latest news from the world of apps, delivered on a weekly basis.
This week, there was a ton of app news. We’re digging into the latest with Apple’s antitrust issues, Tencent’s plan to leverage WeChat to fend off the TikTok threat, AppsFlyer’s massive new round, the booming subscription economy, Disney’s mobile game studio sale, Pokémon GO’s boost to tourism, Match Group’s latest investment and much more. And did you see the app that lets you use your phone from within a paper envelope? Or the new AR social network? It’s Weird App Week, apparently.
Scopely, the massively funded mobile game publisher, has made good on its promise to start buying up more properties with the treasure chest it amassed in a whopping $200 million round last year.
The target this time is Walt Disney Company’s FoxNext Games Los Angeles and Cold Iron Studios. Disney picked up Fox’s game division in the huge $71.3 billion deal which merged the two entertainment powerhouses in 2019.
There’s no word on how much Scopely spent on the deal, but the company is quickly becoming one of LA’s biggest mobile game studios, joining the ranks of companies like Jam City as mega-players in the mobile games ecosystem emerging in Los Angeles.
The city has long been home to game development talent including Riot Games, Activision Blizzard, and others.
FoxNext is already the home of the popular “Marvel Strike Force” game and is developing “Avatar: Pandora Rising”, which is a multiplayer strategy game based on the James Cameron blockbuster, “Avatar”.
The portfolio doesn’t include the Fox IP licensed game titles, which will continue to live under Disney’s licensed game business.
“We have been hugely impressed with the incredible game the team at FoxNext Games has built with MARVEL Strike Force and can’t wait to see what more we can do together,” said Tim O’Brien, Chief Revenue Officer at Scopely, in a statement. “In addition to successfully growing our existing business, we have been bullish on further expanding our portfolio through M&A, and FoxNext Games’ player-first product approach aligns perfectly with our focus on delivering unforgettable game experiences. We are thrilled to combine forces with their world-class team and look forward to a big future together.”
As a result of the acquisition, FoxNext’s President, Aaron Loeb will join Scopely in a newly created executive role, according to the company. Meanwhile, Amir Rahimi, FoxNext’s senior vice president will become assume the mantle of President, Games at FoxNext Games Los Angeles studio, the company said.
Last year, Scopely hit $1 billion in lifetime revenue and recently bought the DIGIT Game Studios to further expand its footprint in Europe and across North America.
Disney announced today it has sold the game studio FoxNext Games Los Angeles, the makers of “MARVEL Strike Force” and other titles, as well as Cold Iron Studios in San Jose, to the interactive entertainment and mobile game company Scopely. The studios were acquired by Disney in 2019 as a part of its $71.3 billion deal for 21st Century Fox. Disney is not, however, divesting of Fox’s full gaming lineup. The company clarified that its separate portfolio of Fox IP-licensed game titles were not a part of this deal and will continue to be a part of Disney’s licensed games business.
Acquisition terms were not disclosed.
FoxNext Games released its first title, “MARVEL Strike Force” in March 2018 and it brought in $150 million in its first year across iOS and Android. Another FoxNext title, “Storyscape,” released in early 2019, offers choose-your-own-adventure tales taking place in the world of “The X-Files” or “Titanic.” More recently, the studio soft-launched “Avatar: Pandora Rising,” a massive real-time strategy and social game set in Pandora from the movie “Avatar.”
According to data from Sensor Tower, “MARVEL Strike Force” has been downloaded more than 26 million times to date. “Storyscape” has topped 1.7 million installs. The Avatar title isn’t broadly available, as it’s still in development. It only has 100,000 downloads at present.
“We have been hugely impressed with the incredible game the team at FoxNext Games has built with MARVEL Strike Force and can’t wait to see what more we can do together,” said Tim O’Brien, chief revenue officer at Scopely, in a statement about the deal. “In addition to successfully growing our existing business, we have been bullish on further expanding our portfolio through M&A, and FoxNext Games’ player-first product approach aligns perfectly with our focus on delivering unforgettable game experiences. We are thrilled to combine forces with their world-class team and look forward to a big future together,” he added.
Scopely, which hit over a billion in lifetime revenue in summer 2019, had also acquired DIGIT Game Studios last year, home to the top-grossing MMO/strategy game “Star Trek Fleet Command” and strategy MMO “Kings of the Realm.”
Other Scopely top game titles include “Looney Tunes World of Mayhem,” “The Walking Dead: Road to Survival,” “Wheel of Fortune: Free Play,” “WWE Champions 2019,” “Yahtzee with Buddies Dice Game,” “Dice with ellen,” “Scrabble Go” and many more.
With its latest acquisition, Scopely adds another top-grossing game to its lineup, expands its in-development pipeline and gains the expertise of the FoxNext team. When the transaction completes, FoxNext Games President Aaron Loeb will join Scopely in a newly created executive role and FoxNext Games SVP & GM Amir Rahimi will lead the FoxNext Games Los Angeles studio within Scopely as president, Games.
Fortnite, one of the world’s most popular games, will now be an official high school sport and college sport thanks to an LA-based startup called PlayVS .
The company has partnered with Epic Games to bring competitive league play to the collegiate and high school level. This also marks PlayVS’s entry into colleges and universities.
PlayVS launched in April of 2018 with a mission of bringing esports to high school, with a league akin to traditional sports like basketball or football. Though a partnership with the NFHS, high schools (or parents, or the students themselves) can pay $64/player to be placed in a league to compete with neighboring schools, just like any other sport.
But PlayVS partnerships go deeper than the NFHS (the NCAA of high school sports), as the company is also partnering with the publishers themselves. This is the part that puts PlayVS a step ahead of its competition, according to founder Delane Parnell .
While other companies are setting up paid competitive leagues around video games, very few if any have partnerships at the publisher level. This means that those startups could be shut down on a whim by the publishers themselves, who own the IP of the game.
PlayVS is the first to score such a partnership with Epic Games, the maker of the world’s most popular video game.
These publisher partnerships also allow PlayVS to productize the experience in a way that requires almost no lift for schools and organizations. Players simply sign into PlayVS and get dropped into their scheduled match. At the end, PlayVS pulls stats and insights directly from the match, which can be made available to the players, coaches, fans and even recruiters.
For PlayVS, the college landscape presents a new challenge. With high school expansion, the NFHS fueled fast and expansive growth. Since launch, more than 13,000 high schools have joined the waitlist to get a varsity esports team through PlayVS, which represents 68% of the country. PlayVS says that just over 14,000 high schools in the United States have a football program, to give you a comparison.
The NFHS has a relationship with the NCAA, but no such official partnership has been signed, meaning that PlayVS has to go directly to individual colleges to pitch their technology. Luckily, they’re going in armed with the most popular game in the world, and at a time when many colleges are looking to incorporate esports scholarships and programs.
And it doesn’t hurt that PlayVS has quite a bit of cash in the bank — the company has raised $96 million since launch.
Unlike the rest of the PlayVS titles, the first season of Fortnite competition will be free to registered users, courtesy of the partnership with Epic Games. Registration for the first seasons closes on February 17 for high schools, and February 24 for colleges and universities. The season officially kicks off on March 2.
The format for competition will be Duos, and organizations can submit as many teams of two as they like. The top teams will be invited to the playoffs with a chance to win a spot in the championship in May.
Tencent, one of the world’s biggest videogaming 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 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.
That would set up another level of rivalry between the two companies, since 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.
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.”
Lee Trink has spent nearly his entire career in the entertainment business. The former president of Capitol Records is now the head of FaZe Clan, an esports juggernaut that is one of the most recognizable names in the wildly popular phenomenon of competitive gaming.
Trink sees FaZe Clan as the voice of a new generation of consumers who are finding their voice and their identity through gaming — and it’s a voice that’s increasingly speaking volumes in the entertainment industry through a clutch of competitive esports teams, a clothing and lifestyle brand and a network of creators who feed the appetites of millions of young gamers.
As the company struggles with a lawsuit brought by one of its most famous players, Trink is looking to the future — and setting his sights on new markets and new games as he consolidates FaZe Clan’s role as the voice of a new generation.
“The teams and social media output that we create is all marketing,” he says. “It’s not that we have an overall marketing strategy that we then populate with all of these opportunities. We’re not maximizing all of our brands.”
Dream Games, a Turkish mobile gaming company founded by former Peak Games employees who worked together on hit puzzle games Toy Blast and Toon Blast, has raised $7.5 million in seed funding.
The company — which is yet to launch a product — is co-founded by CEO Soner Aydemir, the former Product Director at Peak Games. The rest of the Dream Games team are Ikbal Namli and Hakan Saglam (former Peak Games engineering leads), Eren Sengul (former Peak Games product manger), and Serdar Yilmaz (former Peak Games 3D artist).
“Most of the [mobile games] companies believe that the market is saturated, but we believe there are still huge opportunities in the casual puzzle market,” Aydemir tells TechCrunch. “There are too many mediocre mobile games, but players deserve better. We see that there are still millions of players waiting for new, well-designed and enjoyable puzzle games, and we are committed to creating great games to meet players’ expectations”.
Aydemir says Dream Games doesn’t believe in a “hit-or-miss approach” to game development. Instead, he frames the studio’s strategy as “evolution over innovation” and “execution over ideas”. This will see it develop a first flagship title that can be iterated over the long term.
“We plan to fix the pain points for players in existing games,” he says. “Our experience makes us confident we can build something truly global by focusing on a single high-quality, long-standing game instead of multiple flash-in-the-pan titles. We’d rather people were loyally playing our one game for 10 years than losing interest every six months when something new comes along”.
With regards to audience, Aydemir says Dream Games is targeting players over the age of 25 in U.S., Canada and Europe. He pegs gender distribution at 65% female and 35% male. “Our players can be from different socioeconomic and ethnic backgrounds, but they are mainly average people who have routine lives,” he says.
Aydemir is also keen to flag up the burgeoning gaming sector in Turkey, which he claims is positioned to be one of the world’s leading ecosystems for mobile games.
In 2017, Peak Games, based in Istanbul, sold its card and board games studio to mobile gaming giant Zynga for $100 million. Zynga later opened a studio in the city and made further acquisitions, paying $250 million for Gram Games, the Turkish developers behind a number of popular puzzle titles. Other casual gaming studios with a presence in the region include Good Job Games, Ruby Games, Alictus, Rollic Games and Bigger Games.
Welcome back to This Week in Apps, the Extra Crunch series that recaps the latest OS news, the applications they support, and the money that flows through it all. What are the developers talking about? What Do app publishers and marketers need to know? How is international politics playing out in the App Store? What apps is everyone using?
As November kicks off, we’re looking at a number of big apps launches from Microsoft and Adobe — as well as what went wrong. We’re also looking at the iOS bug-squashing release, a bunch of data about app install trends around the world, Google Play’s new loyalty program and what it means for developers, the continued scrutiny of Chinese apps by the U.S. government, and more.
eMarketer remindS us that it recently put out a big report on app installs with a ton of insights. It’s actually been live for a few months, but ICYMI, here are some of the key data points and highlights:
iOS Bug Squashing: Apple fixed the iOS bug that killed your background apps. Apple this week finally squashed a very annoying bug in iOS 13 that made the OS overly aggressive about killing background apps and tasks. Apps like Safari, YouTube, Overcast and others were impacted, leading users to lose emails or the video they were watching just when they switched away for a few seconds. What Apple can’t fix is a growing concern that Apple has “lost the plot” following a series of extremely buggy software updates across its product line, which made users hesitant to upgrade to macOS Catalina, and bricked people’s HomePods.
Google admits it can’t secure the Play Store on its own: Google this week announced partnerships with security firms ESET, Lookout, and Zimperium to form what it has branded the “App Defense Alliance.” The goal, the company says, is to unite the security industry to fight malicious apps across Android’s ecosystem of 2.5 billion devices. Basically, Google will integrate its own detection systems with each partner’s scanning engine to help it uncover potential risks and threats. However, the fact that Google is now essentially outsourcing security to a partner ecosystem is an admission of failure, to some extent, about its abilities to keep the Play Store free from bad actors on its own. (But of course, we all knew that already, right?)
Photoshop for iPad is tanking: Adobe released its most important mobile app ever with this week’s launch of Photoshop for iPad. But fans panned the app because it’s missing several key features. Like RAW support! The app now has 2 stars out of 5…yikes. So what went wrong?
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