Epic’s Unreal Engine 5 (out in 2021) Demo Here->
There have been a lot of interesting tidbits related to digital assets and video gaming over the last week - see below.
Today was a big day, the biggest gain for US Equities in weeks in fact, on news of a promising vaccine and looser restrictions on the economy. It is also very big news when someone who many expected to become the CEO of Disney, a $211 billion market cap company, decides to go to a private company. This is exactly what is happening as Kevin Mayer will leave Disney to become the CEO of TikTok and the COO of ByteDance China. Mayer is considered a deal maker within Disney, and is associated with BAMTech, which powers Disney Plus, Lucasfilm (and the Star Wars franchise), Pixar, Marvel and 21st Century Fox. According to Apptopia, ByteDance did $50m in revs in Q419, +310% YoY, which has likely only accelerated sharply in the Flight to Digital. The FT in March reported ByteDance has reached an implied valuation of $90bn-$100bn.
Separately, I wanted to flag the demo of Epic’s Unreal Engine 5 above, expected in 2021, is worth a view, and appears to be yet another demonstration of the company’s leadership. As mentioned in the past, the company’s content, e.g. Fortnite, provides a way for them to demonstrate their technology prowess, and the real power of the business model is their ability to become the industry’s “go to” as the technology standard, e.g. Unreal Engine. The point that is made repeatedly in the demo is that Unreal Engine 5 will allow games to look more like movies, by bringing more cinematic quality tech to gaming. The main features cited are Nanite and Lumen, which are described below. The demo is especially impressive with respect to Lumen because it provides cinematic lighting that would typically only be used in film and is especially cool to see in action - think running with a flashlight and seeing the path light up in a very real-life way.
Nanite: virtualized micropolygon geometry frees artists to create as much geometric detail as the eye can see.
Lumen: fully dynamic global illumination solution that immediately reacts to scene and light changes.
In addition to the new Unreal Engine 5 demo, there is so much news coming out of Epic that it is worth keeping a running list from the past week:
After Marshmello, Travis Scott and Diplo in-game concerts, Fortnite launched a new Party Royale format with deadmau5, Steve Aoki and Dillon Francis and the video game publication IGN captured footage of the entire event and shared it.
Fortnite was confirmed as a launch title for PlayStation 5 and Xbox Series X, both launching Fall 2020.
Season 3 Battle Pass is set to begin June 2 with a new theme and major map changes.
Fortnite was the most popular game on Twitch last month and broke into the top-10 most-watched.
Thanks and have a great week!
Angie
Digital Assets
Max Fiege | LinkedIn | Twitter | Email
Bitcoin enters fourth block reward epoch with a reduction to 6.25 BTC per block
Backdrop: Bitcoin has scarcity with a finite supply of 21 million bitcoin. What gives Bitcoin its scarcity? Just like gold, Bitcoin is also mined, but this is done electronically by a global network of computers competing to verify bitcoin transactions. The reward for participating in this virtual mining is Bitcoin, about every 10 minutes. The reward just went from 12.5 new bitcoins to 6.25 new bitcoins - this event is known as the Halving.
Bitcoin now has an annual supply emission lower than that of gold
Hashrate declined by 30% as miners saw BTC-denominated revenues cut in half
BTC is up 12.7% since the halving.
TSMC to build next-generation chip factory in Arizona
Set to begin production of 5nm chips by 2024
JPMorgan takes on Coinbase and Gemini as banking clients
Surprising after a long period of concerns voiced by CEO Jamie Dimon on Bitcoin and traditional firms reluctance to provide services to cryptocurrency firms. Just nine months ago, Barclays stopped providing services to Coinbase.
Could this be in anticipation of possible IPO decisions down the road?
dYdX launches decentralized perpetual Bitcoin swap contracts on Ethereum
Done via USDC contracts, with ETH and DAI alternatives on the roadmap
Represents continuation of “Ethereum is eating finance” narrative
**Not available in the US
Singapore wealth fund Temasek joins Libra Association
Viewed as a compelling beachhead for the currency initiative in the East Asian payments ecosystem
Monetary Authority of Singapore has spent four years examining central bank digital currencies with its Project Ubin, and a Libra-based retail payments stablecoin pegged to the Singapore dollar could prove to be the next step
Libra last week announced former U.S. Treasury Department official Stuart Levey as its first CEO.
Slow Ventures (Partners Sam Lessin and Dave Morin, both formerly of Facebook) also named as a new member. Members who have departed include MasterCard, Visa, PayPal, EBay, Stripe.
Disruptive Entertainment
Nik Vantzos | LinkedIn | Email
Animal Crossing: New Horizons is now the best-selling Switch game of all time in Japan
Breaking 3.9M total copies sold, which overtakes Super Smash Bros: Ultimate at 3.7M. The game has made headlines throughout the pandemic as it crushes sales and brings people together in a fun, digital environment. Check out our post from earlier this week on Animal Crossing.
Activision Blizzard enters into multi-year partnerships with Sportsradar
Sportsradar’s Intelligence and Investigation Services unit will monitor the integrity of Activision Blizzard’s Overwatch and Call of Duty Leagues, protecting them from betting-related corruption.
This is a positive investment into the company’s maquee leagues, in the wake of Overwatch (and other leagues) losing talent to Riot Games’ Valorant.
Twitch viewers watched 334M hours of Valorant in April
Overall Twitch viewership continues to surge during COVID-19. According to a monthly report from StreamElements and Arsenal.gg, livestream viewership rose 45% MoM for April, and 99% YoY.
Riot Games’ Valorant was the most popular game on Twitch, and drove several new streamers to the Top 10.
Valorant’s 334m total hours on Twitch in April compares to YouTube Gaming’s 461m total gaming hours watched in April and Facebook Gaming at 291m hours.
Earnings
Square Enix (Q4 + Annual)Wednesday, 5/13
Profits driven by continued growth of its mobile division, and strong performance from Romancing SaGa Re: Universe and Dragon Quest Walk
Revenue for the year was $2.43B vs. $2.53B last year (mobile and MMO reveneues up, but HD Games division down on Final Fantasy VII delayed release)
Capcom (Q4 + Annual) Friday, 5/8
Sharp decrease in overall sales (revenues down 18.4% yoy), due to a shift to digital sales, which cut down on sales of physical copies of games
Record profits for third straight year - up 27.1% to $150M due to shift to higher-margin digital sales - and the company announced it will double down on digital games
Strong performance on Monster Hunger World: Iceborne
Q120 record quarter for videogame sales overall in the US, with $10.86B in sales in the US during Q1 (+9% YoY)
M&A and Raises
Digital Assets
Disruptive Entertainment
Sleeper raises $20M Series B led by A16z for League of Legends fantasy esports game
Rogue Games, LA-based game publisher, raised $2M in funding, led by Runa Capital
Streaming startup Parsec raises $7M Series A for remote game development
NetEase picks banks for its Hong Kong secondary listing - Credit Suisse & CICC
AppLovin acquired Machine Zone (Game of War, Final Fantasy XV (mobile) studio) - financials undisclosed; Machine Zone was valued at $5B in 2016 Series D
Blast, an Esports competition organizer, raised $13.5M, led by Rocket Software co-founder and Vækstfonden
Facebook acquiring Giphy, a GIF creation platform & search engine, for $400M
Keywords Studios is raising $122M to acquire businesses struggling with the pandemic
Signum Growth Capital Team
Angela Dalton | Founder and CEO | angela@signumgrowthcapital.com
Max Fiege | Director, Digital Assets | max@signumgrowthcapital.com
Nik Vantzos | Director, Disruptive Entertainment | nik@signumgrowthcapital.com