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Unity’s IPO numbers look pretty … unreal?
Unity, the company founded in a Copenhagen apartment in 2004, is poised for an initial public offering with numbers that look pretty strong.
Even as its main competitor, Epic Games, is in the throes of a very public fight with Apple over the fees the computer giant charges developers who sell applications (including games) on its platform (which has seen Epic’s games get the boot from the App Store), Unity has plowed ahead, narrowing its losses and maintaining its hold on over half of the game development market.
For the first six months of 2020, the company lost $54.2 million on $351.3 million in revenue. The company narrowed its losses compared to 2019, when the company lost $163.2 million on $541.8 million in revenue, and 2018 when the company lost $131.6 million on $380.8 million in revenue. As of June 30, 2020 the company had total assets of $1.29 billion and $453.2 million in cash.
Increasing revenue and narrowing losses are things that investors like to see in companies that they’re potentially going to invest in, as they point to a path to profitability. Another sign of the company’s success is the number of customers that contribute more than $100,000 in annual revenue. In the first six month of the year, Unity had 716 such customers, pointing to the health of its platform.
The company will trade on the NYSE under the single-letter ticker “U”. The NYSE only has a few single letters left to offer, although Pandora gave up the letter P when it was bought by Liberty Media back in 2018.
Unlike Epic Games, Unity has long worked with the major platforms and gaming companies to get their engine in front of as many developers and gamers as possible. In fact, the company estimates that 53% of the top 1,000 mobile games on the Apple App Store and Google Play Store and over 50% of mobile, personal computer and console games were made with Unity.
Some of the top titles that the platform claims include Nintendo’s Mario Kart: Tour, Super Mario Run and Animal Crossing: Pocket Camp; Niantic’s Pokémon GO and Activision’s recent Call of Duty: Mobile are also Unity games.
The knock against Unity is that it’s not as powerful as Epic’s Unreal rendering engine, but that hasn’t stopped the company from making forays into industries beyond gaming — something that it will need to continue doing if it’s to be successful.
Unity already has a toehold in Hollywood, where it was used to recreate the jungle environment used in Disney’s “Lion King” remake (meanwhile, much of “The Mandalorian” was created using Epic’s Unreal engine).
Of course, Unity’s numbers also reveal that the size of its business is currently a bit smaller than its biggest rival. In 2019, Epic said it had earnings of $730 million on revenue of $4.2 billion, according to VentureBeat . And the North Carolina-based game developer is now worth $17.3 billion.
Still, the games market is likely big enough for both companies to thrive. “Historically there has been substantial industry convergence in the games developer tools business, but over the past decade the number of developers has increased so much, I believe the market can support two major players,” Piers Harding-Rolls, games analyst at Ampere Analysis, told the Financial Times.
Venture investors in the Unity platform have waited a long time for this moment, and they’re certainly confident in the company’s prospects.
The last investment round valued the company at $6 billion, with the secondary sale of $525 million worth of the company’s shares.
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US gaming industry records another excellent quarter as pandemic fuels sales
The COVID-19 pandemic has utterly decimated a number of industries over the past several months, but the U.S. gaming industry continues to benefit as people continue to be stuck at home. Yet another report from NPD highlights an excellent quarter, with spending hitting a new Q2 record in the States.
According to the figures, gamers spent $11.6 billion, marking a 30% increase over a year prior. It was also a 7% increase over Q1’s 10.9 billion, as spending continues while the pandemic continues to rage.
Games themselves comprised $10.2 billion of that figure (itself a 28% increase y-o-y), with some familiar titles occupying the top spots, including Animal Crossing: New Horizons, Call of Duty: Warzone and Call of Duty: Modern Warfare. The gaming hardware category saw a 57% increase from 2019, with Nintendo Switch, PlayStation 4 and Xbox One all seeing strong sales.
The Switch isn’t a surprise, given shortages experienced earlier in the year. Perhaps a bit more unexpected are continued sales on the PS4 and Xbox One, given that both consoles are set to be eclipsed by next-generation devices later in the year. Of course, those upcoming systems aren’t doing gamers much good during the current moment of stay at home orders.
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‘Animal Crossing: New Horizons’ and the limits of today’s game economies
Kaiser Hwang is a longtime member of the games community and a vice president at Forte, an organization building an open economic platform for games.
“Animal Crossing: New Horizons” is a bonafide wonder. The game has been setting new records for Nintendo, is adored by players and critics alike and provides millions of players a peaceful escape during these unprecedented times.
But there’s been something even more extraordinary happening on the fringe: Players are finding ways to augment the game experience through community-organized activities and tools. These include free weed-pulling services (tips welcome!) from virtual Samaritans, and custom-designed items for sale — for real-world money, via WeChat Pay and AliPay.
Well-known personalities and companies are also contributing, with “Rogue One: A Star Wars Story” scribe Gary Whitta hosting an A-list celebrity talk show using the game, and luxury fashion brand Marc Jacobs providing some of its popular clothing designs to players. 100 Thieves, the white-hot esports and apparel company, even created and gave away digital versions of its entire collection of impossible-to-find clothes.
This community-based phenomenon gives us a pithy glimpse into not only where games are inevitably going, but what their true potential is as a form of creative, technical and economic expression. It also exemplifies what we at Forte call “community economics,” a system that lies at the heart of our aim in bringing new creative and economic opportunities to billions of people around the world.
What is community economics?
Formally, community economics is the synthesis of economic activity that takes place inside, and emerges outside, virtual game worlds. It is rooted in a cooperative economic relationship between all participants in a game’s network, and characterized by an economic pluralism that is unified by open technology owned by no single party. And notably, it results in increased autonomy for players, better business models for game creators, and new economic and creative opportunities for both.
The fundamental shift that underlies community economics is the evolution of games from centralized entertainment experiences to open economic platforms. We believe this is where things are heading.
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Hand-crank a level of Super Mario Bros. on Lego’s new 2,646-piece NES kit
Feel that? That’s the unmistakable and overwhelming sensation of nostalgia for your misspent youth coursing through your blood, as the 35th anniversary of the Nintendo Entertainment System is sneaking up on you. The original NES turns 35 years old tomorrow, and to celebrate another shocking reminder of our own mortality, Lego just announced another fantastic-looking set scheduled to arrive later this summer.
Image Credits: Lego/Nintendo
After a brief tease, the NES Building Kit is now officially official, featuring a buildable console, cartridge and controller (even the RCA ports are present on the system’s side). The game can be loaded into the system and locked in place, and the controller has its own cable that plugs directly into the front. The pièce de résistance, however, is that period-appropriate television set. There’s a buildable 2D Mario that runs and jumps along a level that unfolds and scrolls as you spin a hand crank.
Image Credits: Lego/Nintendo
Honestly, the execution is great. Just really, really clever. It plays on the boxy eight-bit graphics of the classic console, while offering an adorable counterpart to the already announced Mario set. The power of synergy is strong here. The Mario from the other set actually plugs into the top of the TV set once you remove a piece, with its speaker playing out the soundtrack and effects as his 2D counterpart makes his way through the level.
Image Credits: Lego/Nintendo
No word on pricing, but I’m willing to bet that the final price is no object for many fans. Also, knowing what we know about Lego, it seems safe to guess it’s not going to be cheap. There are 2,646 pieces in the set. It’s one of the most technically impressive Lego sets I’ve seen, starting with the detailed accuracy of the console and really taking it up a notch with the crank system that advances the background, as Mario, attached to a stick, bounds up and down. The Mario from the other set, meanwhile, appears to scan for the colors on the series of blocks at the top, outputting the corresponding sounds.
Honestly, this thing effectively triggers all of the human nostalgia centers simultaneously, and you’re powerless to deny it, so you might as well earmark some cash and set aside some shelf space. If I had to guess, I would put it somewhere in the ballpark of $300. Consider the Mario set the playable one for the kids and this one a complimentary conversation piece for their parents who grew up playing the original system. It’s available through the Lego site (and those brick and mortar stores that happen to be open) starting August , along with the Super Mario set). It will be available at additional retailers at some point next year.
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Here’s the full lineup of Lego Super Mario sets, due out August 1
Back in March, Nintendo and Lego teamed up to reveal one of the most delightful bits of colorful ephemera in an otherwise overwhelmingly bleak time. Lego Super Mario continues to be one thing worth looking forward to through it all, for the young and nostalgia-inclined old alike. And thankfully you only have to hang tight a couple more months to get it.
Image credits: Nintendo
Today, the childhood staples revealed the full rundown of sets. The list includes the already announced Starter Course, along with 10 expansion sets. Four Power-Up Packs and a variety of Character packs. The Starter Course is currently up for pre-order on Lego’s site, and all will be made available on August 1, online and through select retailers that happen to be open for business.
The Expansion sets include a range of familiar levels from the Nintendo series and a few other riffs on the Mushroom Kingdom, including Bowser’s Castle Boss Battle, Mario’s House and Yoshi, King Boo and the Haunted Yard and Toad’s Treasure Hunt. Those range in price from $20 to $100. The Power-Ups will all run $10 and the blind bag Character Packs are $5. Nothing too crazy in Lego terms, but any fan will tell you these things add up quickly. All of the sets are designed to be used together, and each features clever articulation designed to mimic gameplay.
Image credits: Nintendo
The Starter Course, meanwhile is $60. Of the figures, Mario continues to be the most advanced, with four built-in LEDs (two eyes, a mouth and a chest), a speaker for sound and color sensors on his feet, so the figure can track where it jumps. Understandably, he’s the centerpiece of all the play sets.
There’s also some more information on the included app, which offers build guidance, keeps track of scores and presses young players to build and rebuild the levels. There’s a sharing function, as well, along with a kid-safe forum for discussing build ideas.
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In spite of an uncertain economy, US video game sales remain strong
May marked another extremely strong month for gaming sales, according to the latest figures from NPD. Between software, hardware, accessories and game cards, Americans spent around $977 million. That’s a 57% jump since the year prior and the highest it’s been for the month since 2008, when the country was feeling the strain of the Great Recession.
All of this is made more remarkable by the fact that the United States has been struggling with COVID-19-related pains for months now. This week, another 1.5 million Americans filed for unemployment, bringing the total number to 44.2 million since the beginning of shutdowns. But as countless other venues for non-essential spending have suffered, gaming has thrived.
It’s clear that games are how Americans are choosing to spend whatever sort of disposable income they might have, as they’re stuck at home, away from other humans. And that spending has continued for a few months now, even after Microsoft and Sony have begun hyping their next-generation consoles — both due at at the end of the year.
That, perhaps, is part of why Nintendo continued to dominate console sales with the Switch, in spite of hardware shortages. Animal Crossing: New Horizons remained the top-selling title for the console (and third over all), owing to the online cult it has amassed through social-first gameplay. Call of Duty: Modern Warfare and Grand Theft Auto V took the No. 1 and No. 2 spots, respectively, on both the PlayStation 4 and Xbox One.
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Nintendo now says 300,000 accounts breached by hackers
Nintendo has almost doubled the number of user accounts compromised by hackers in the past few months.
The Japanese gaming giant originally said that 160,000 Nintendo accounts were compromised, exposing personal information like the account owner’s name, email address, date-of-birth and their country of residence. In an updated statement, the company said another 140,000 Nintendo accounts had been compromised.
Nintendo said the number increased as a result of its continuing investigation.
The company said it reset those passwords and contacted customers. The statement reiterated that fewer than 1% of all accounts were impacted by the breach.
News of account compromises came as early as March when users complained that their accounts were charged for digital items without their permission. Nintendo said in a tweet in April that users should enable two-factor authentication on their accounts but without saying why.
It took another two weeks before Nintendo admitted that accounts had been improperly accessed.
But Nintendo still hasn’t said how the accounts were accessed, beyond claiming that hackers got access to accounts by obtaining account passwords “by some means other than our company’s service.” Its implication is that users may have used weak passwords that hackers cracked, or reused passwords that were breached from other services and used by hackers to break into their Nintendo accounts.
If you haven’t enabled two-factor authentication on your Nintendo account yet, now would probably be a good time.
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US video game sales have record quarter as consumers stay at home
New numbers from NPD confirm what we’ve known for a while: The first quarter of 2020 was a very good one for gaming companies. The new report notes that sales hit a record $10.86 billion in the States between January and March of this year, marking a 9% increase over a year prior; $9.58 billion of that figure was from video game content.
The primary driver is, you guessed it, COVID-19. As stay at home orders have been enacted on the federal and state levels, people are coping with the ongoing daily horror that is life in 2020 by playing video games. Lots and lots of video games.
Here’s NPD’s Mat Piscatella further confirming our suspicions: “Video Games have brought comfort and connection to millions during this challenging time. As people have stayed at home more, they’ve utilized gaming not only as a diversion and an escape, but also as a means of staying connected with family and friends. Whether it was on console or mobile, PC or virtual reality, gaming experienced play and sales growth during the first quarter.”
According to NPD’s Q1 2020 Games Market Dynamics: U.S. report, overall total industry consumer spending on #videogaming in the U.S. reached a record $10.86 billion in the first quarter of 2020 (Jan. – Mar.), an increase of 9 percent compared to the same time period last year.
— NPD Games (@npdgames) May 15, 2020
That last bit is, in part, key to many consumers’ choice of game titles. As already noted by the firm, Animal Crossing: New Horizons had its own record-setting first quarter. That, in turn, helped drive Switch sales, in spite of Nintendo’s well-documented supply issues. The title arrived just in the nick of time for stay at home orders in the U.S., delivering a kind of front-facing social experience that much of the competition lacks. Also, turnips.
Matter of fact, the Switch’s success actually helped supplement losses of other platforms. Microsoft and Sony will no doubt make up gains at the end of the year with their next-gen consoles. For now, however, many consumers are likely holding out until their holiday arrives to invest in Xbox or PlayStation hardware, in spite of the pandemic. The U.S.’s soaring unemployment rate no doubt also had an impact on the industry’s bottom line.
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Nintendo sells a lot more Switches, as people stay at home playing Animal Crossing
A couple of weeks ago, we noted some new NPD numbers pointing to a very good March for the Switch. Nintendo’s financials this week bear out the predicted surge in popularity for the three-year-old console.
The company has sold 21 million Switch units in the past year, handily beating a 19.5 million forecast; 6.2 million of those systems were the newer, cheaper Switch Lite, which hit the market in September. All of this comes as the company has run up against shortages through a combination of increased popularity and a global supply chain knocked off balance from COVID-19.
In spite of the increased difficulty in procuring a device at retail, the pandemic looks to have had a positive impact on Switch sales, as stay at home orders have increased interest. The arrival of Animal Crossing: New Horizons couldn’t have been better timed, either. The title fulfills both the increased demand for stationary entertainment as well as virtual socialization.
No surprise, then, that the game has become the console’s fastest selling. As of the end of March, 11.77 million copies have been sold. The figures make New Horizons the seventh best-selling Switch title of all time — between Pokémon: Let’s Go, Pikachu!/Eevee! And Splatoon 2 — in spite of having only been on sale for just over a month.
The year ahead may look at bit rockier for the company, however, with the arrival of next-gen consoles from Microsoft and Sony arriving this holiday season.
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Daily Crunch: AT&T CEO steps down
AT&T is getting a new boss, the first piece of Apple and Google’s COVID-19 contact tracing program should be available soon and Snap is looking to raise more debt.
Here’s your Daily Crunch for April 24, 2020.
1. Randall Stephenson to step down as AT&T chief, succeeded by COO John Stankey
A big changing of the guard is underway at one of the world’s biggest names in telecoms and media. The change is effective on June 1, and while Stephenson is retiring, he will stay on as executive chairman of AT&T until January 2021.
Stankey has held other roles at AT&T, including CEO of WarnerMedia and CEO of the AT&T Entertainment Group. His promotion suggests a continuing emphasis on the media side of the business.
2. First version of Apple and Google’s contact tracing API should be available to developers next week
The first version of Apple and Google’s jointly developed, cross-platform contact tracing API should be available to developers as of next week, according to a conversation between Apple CEO Tim Cook and European Commissioner for internal market Thierry Breton.
3. Snap looks to load up on cash in sizable debt offering
Snap’s Q1 earnings impressed investors but the company is still losing plenty of cash and it’s clear that the full impact of the digital ad market’s downturn won’t be seen until the company’s Q2 earnings. The company is now looking to raise looking to raise $750 million.
4. Google ditched tipping feature for donating money to sites
Leaked images obtained by TechCrunch reveal that Google considered and designed a feature that would let people donate money to websites to help support news publishers, bloggers and musicians. But the company ultimately scrapped the idea.
5. Seven VCs look into the future of fintech
Although it looks like the COVID-19 pandemic has clipped the tails of many unicorns, this era won’t last forever. Investors expect the domestic and global economy to recover, perhaps as soon as late 2020 or early 2021. (Extra Crunch membership required.)
6. House passes COVID-19 relief package to replenish PPP loan funding
The interim legislation will allocate $310 billion to replenish the SBA’s Paycheck Protection Program (PPP), $75 billion for hospitals and $25 billion for COVID-19 testing. President Trump previously expressed his approval of the bill, as well as his intention to sign it and make the funds available as quickly as possible.
7. After 160,000 accounts are compromised, Nintendo shuts down NNID logins
Nintendo confirmed earlier reports of account breaches dating back over the past few weeks. The gaming giant issued an update (via Nintendo Japan) noting that around 160,000 Nintendo Accounts were impacted, with accounts being used to purchase digital items without the owner’s consent.
The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 9am Pacific, you can subscribe here.
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