Game Company Acquisitions Have Cooled, Say Analysts

Acquisition in the gaming industry has slowed down of late, according to the opinions of a pannel of industry investors at YetiZen’s San Francisco Game Developer’s Workshop, led by Zynga’s diminishing fortunes. Those attending the panel included Blumberg Capital vice president Chris Gottschalk, Sing Tel Innov8 managing director of investments Jeff Karas, and GameStop Digital Ventures general manager Chris Petrovic.

“Clearly Zynga had an impact on the later-stage investments,” Gottschalk said. “We see it not only in gaming but in all sectors. The public markets are going to affect what’s happening in some of the later-stage deals.”

“I agree. It’s a more sober environment around valuation,” said Karas. “Valuations get a little bit more skimpy. Still, the top games and the top companies are able to command good valuations. Maybe they’re a little frothy on occasion, but the majority — especially the ones that are less proven — are definitely more sober in terms of turns and valuation.”

“Our analysis continues to be more conservative,” noted Petrovic. “On a macro level I think valuations are leveling out. But at the same time, you have these diametrically opposite competing forces. There are the outliers like Zynga, with things like A Bit Lucky, where the dollar amount wasn’t a lot, but I guarantee there was a competitive bidding situation there. Where before there were informal metrics like $750,000 or $1 million dollars per engineer, they took it to $1 million dollars per employee. People start running around with that. “Look at this one example. This is what we should be doing.” Then you have the GREEs and DeNAs of the world buying unprofitable companies in the mobile space at huge multiples because they don’t want to have a competitive bidding situation. They have the cash flow that they’re drawing on back home.”

“We do pay attention to public comps, so the switch in public comps has affected our thinking on valuations,” added Gottschalk. “Obviously, if a company is growing fast, you can give it a premium to public multiples, but if you stretch your neck out too far as an investor, ahead of the public multiples, there’s more risk. It’s a factor in the equation. And it’s not just games, by the way. The consumer valuations across the board had gotten a little frothy. They’re starting to cool off and you’ll see them cool off more. That doesn’t mean consumer is a bad space. It’s just that some of the valuations got ahead of what was warranted. Once that breaks, you should be able to see the market resume. One twist on that, which I’ll add to this. Typically we will look at revenue comps. The challenge for Zynga, for example, is: What’s the price/earnings ratio when you’re not making earnings? You could argue that some good game companies would trade for a lot more on a price/earnings basis than on a revenue-multiple basis. It goes back to my argument about how it’s nice to make money. You at least have two ways to evaluate.”


Amazon Offers Kids Content With FreeTime Unlimited

Amazon has included parental controls called FreeTime, which is a mode where parents can “whitelist” any content on the device designed for kids for it’s Kindle Fire tablets. There will now be paid version of this service as well, with a large amount of pre-curated content called FreeTime Unlimited.

With major children’s media providers chipping in, like Disney, HIT Entertainment, Nickelodeon, Marvel and DC Comics, there will be full books, videos, games and apps available in FreeTime Unlimited. The service is easy to use and everything can be downloaded with a simple tap.

All of the content for the pre-selected titles is designed for kids between the ages of three and eight. The idea of the program is to offer content that parents don’t have to continually vet for their kids.

“We’re trying to solve the problem for parents that, there’s so much content out there — half of which I don’t know if my kid is going to like or not like — and quite frankly is very expensive,” said Peter Larsen, Amazon’s vice president of Kindle products. “So for a very low price per month, you can get access to thousands of books, thousands of apps, thousands of games — all the really big brands.”

FreeTime Unlimited content is not included with Amazon Prime, but subscribers to Prime can purchase FreeTime for $2.99 a month (without, it’s $4.99). Multiple accounts can be had with a family plan for $6.99 ($9.99 for non-Prime), where kids will be able to custom their stream to their own preferences.

“We made the decision — and it was kind of a tough one — to not take away content,” says Larsen. “We thought if you’re paying the subscription, you should get it all. And who knows Your four-year-old kid might be reading at a seven-year level. But we filter it based on age and gender. If your kid is three, he shouldn’t be seeing content that’s appropriate an eight-year-old, which will be way down. Unless they use it.”


Warhammer Picked Up By The Creative Assembly

Sega has announced that it has signed a license with Games Workshop to produce Warhammer games. Developers at The Creative Assembly will create multiple titles based on the enduring fantasy brand.

The developer is known for its popular Total War strategy titles, and it is likely that the Warhammer games will be made in that mold. The Warhammer game, expected out in 2014, is one of five projects currently in development at Creative Assembly including Total War: Rome II and an Aliens game.

Ubisoft Teams With New Regency For Splinter Cell Film

Ubisoft Motion Pictures and New Regency are working together on a Splinter Cell film, starring Tom Hardy as Sam Fisher. New Regency is also producing Ubisoft’s Assassin’s Creed film starring Michael Fassbender and it is expected that Fox will distribute both films,

“With actor Tom Hardy attached and screenwriter Eric Warren Singer to write the script, Ubisoft Motion Pictures will lead the development with the support of New Regency to bring the franchise to the big screen in a dynamic way,” said Ubisoft Motion Pictures chief executive officer Jean-Julien Baronnet said. “For Ubisoft Motion Pictures, creative control is key and New Regency shares our commitment to respecting the creative freedom of our team. Their ability to produce both blockbusters and intriguing indie hits is an ideal fit for the Splinter Cell franchise.”

Source: Variety

Guitar Hero 7: Why It Got Canned

According to an anonymous source, time and budget concerns sunk Guitar Hero 7. Hopes for a new art style and tailored music videos fell by the wayside and a new controller posed huge problems.

“When the songs started coming in, a great sense of dread came about everyone with an active brain,” said the source. “The game had all of the worst hits from the 1990’s. They realized that, with our lack of budget and time, they couldn’t get quality music so they bought bargain basement music like ‘Closing Time’ and ‘Sex and Candy.’ There were some songs in there that had been used at least three times in the Guitar Hero franchises before.

“This amazing thing was a six stringed guitar. Not a real guitar, or even full six-stringed. It had the classic Guitar Hero buttons on the neck with one extra new button, and six strings where the strum bar used to be. YAY! Now they have an extra button and five more strum bars! The strings [on the prototypes] were unresponsive and loose, and the guitars cost a fortune to make. No one could figure out a way to make it so your average Joe could buy one.”

Source: Kotaku

App Store Leaders Comprise Half Of Total Revenue: Canalys

Canalys estimates that 25 developers pocketed 50 percent of U.S. app revenue during the first 20 days of November 2012. Those top developers saw $60 million in paid downloads and in-app purchases; only Pandora Radio was not a game developer on that list.

“Part of the story here is that successful game developers almost invariably have multiple titles generating revenue,” said Canalys vice president and principal analyst Chris Jones. “Zynga, for example, had 15 titles in the list of top 300 grossing iPhone apps on average in Apple’s App Store every day, and nine titles in the equivalent list in the Google Play store. Even with its singular focus on its Angry Birds franchise, Rovio has multiple game variants in the list. With the holiday season now underway, we expect to see many of these top game developers employing discounts and special offers, taking advantage of their ability to cross-promote within their app portfolios.”

Nearly half of the top paid apps on Google Play and the App Store were games, while roughly a third of the top free apps on Google Play and the App Store were game apps. “Discoverability is a particular issue in the Apple App Store and in Google Play given the huge inventories they boast,” said Canalys senior analyst Tim Shepherd. “With top game developers’ content so prevalent in the stores, it can be hard for other good quality apps to get the attention they deserve. Developers of other kinds of apps need to consider how to promote them. Depending on the type of app, they should consider how best they can exploit social media and social recommendations, tactical sales promotions and discounts, branding tie-ups and targeted in-app advertising.”

Source: Canalys

Zynga Applies For Nevada Gambling License

Zynga has started the process of being offered a gaming license with the Nevada Gaming Control Board. The process from the state of Nevada, which will review Zynga’s financial status, could take between 12 to 18 months.

“We anticipate that the process will take approximately 12 to 18 months to complete,” said Zynga chief revenue officer Barry Cottle. “As we’ve said previously, the broader U.S. market is an opportunity that’s further out on the horizon based on legislative developments, but we are preparing for a regulated market. We’ve also recently partnered with to bring the highest quality real money gaming experiences to our U.K. players in the first half of 2013.”

Source: Wall Street Journal

Nintendo Console History

In celebration of the release of the Wii U, a fan created a two minute animation to Testarossa (SebAstian Remix) celebrating Nintendo hardware. It’s impressive, even if it leaves off entries like the GBA SP and Virtual Boy.

Gamers And Beer, Finally

Miller Lite has a TV spot showing a group of urban-hip beer drinkers gathered around for a raucous session of… gaming. The ad features familiar gamer types playing a shooter – the Ninja (the leet), the Rookie (the noob), the Ringer (a ringer), and Wild Bill (probably a camper). The Ringer is played by YouTube gaming personality Melonie Mac.

Show your valid ID at the door and give the bartender a confident nod, gamer. You’ve come of age.