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EA's Live Service Savior

Author

Troy Fields
May 17, 2022

Welcome to Lootbox - a weekly newsletter covering the business side of video games.

What's in this Lootbox?

  • 💍 Elden Ring Sales

  • 📉 Unity Crumbles

  • 🎨 EA's Live Service Savior

  • 📷 Meme

💍 Elden Ring Sales

Elden Ring is the latest game from FromSoftware which launched on February 25th 2022. Elden Ring much like its precursors from FromSoftware is insanely difficult to play, but for some reason gamers seem to love it. The game's publisher released its latest financial results stating it sold 13.4 MILLION copies of the game in just the first month after release.

To make a totally unreasonable comparison, Taylor Swift's Fearless sold 12 million copies world wide (her best selling album to date).

To make a much more reasonable comparison, LEGO Star Wars: The Skywalker Saga sold about 3.2 million copies in its first few weeks.

Like dollar signs? Average price we can assume for Elden Ring is $60, so 13.4 million copies could be upwards of $800,000,000 in revenue.

📉 Unity Crumbles

Unity - the game engine you use if you don't use Unreal Engine announced their Q1 2022 earnings this past week and... it didn't go very well.

After getting pounded along with the overall market in previous weeks, Unity took a significant hit after reporting trouble with their ad business mostly related to Apple's new privacy changes.

Q1 revenue came in at $320 million (+36% yoy) and as of close Friday May 13th, Unity's market cap was $11.6 billion.

Long time readers may remember Unity's biggest competitor Epic Games (makers of Unreal Engine) recently raised funding at a $31.5 billion valuation.

Notable examples of AAA titles using Unity that were mentioned in the earnings call included Angry Birds Classic and the very successful Rainbow Six Mobile.

🎨 EA's Live Service Savior

Publishing seems to be bigger business than game engines where Unity did $320 million in revenue, EA reported last week they did $1.8 billion.

This was the end of EA's fiscal year where their total FY22 bookings was $7.5 billion (+21% yoy). Live services represented 71% of total net bookings for FY22.

What is live services?

Traditional video game publishing involved developing a game and then selling it to the public... and that was it. Today's most popular games like Fortnite, Apex Legends, CoD, or VALORANT are all free-to-play but have monetization through in-game add-ons (mostly aesthetic upgrades like a character skin). This allows the publisher to capture more value from their IP and for longer cycles.

So basically:

Live Services = microtransactions from existing games (mostly free-to-play)

Full Game = traditional go to GameStop and buy Elden Ring for $60.

EA still has to operate and invest in additional content and development for their live service games, which makes the video game industry look a lot closer to traditional SaaS instead Hollywood.

EA has a market cap of $35 billion as of close last Friday.

📷 Meme

Feedback From Last Week's Lootbox :)

🎮🎮🎮 Great!

"Taught me something new that I immediately added to my iphone: that Xbox cloud gaming is finally supported via a Safari app"

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