Pinned straw:
@Hackofalltrades recent post has prompted me to post a straw for Playside considering the same question, is it time to buy or are there larger issues at play. Before I look at a valuation, below is a look at some headwinds.
I came across this slide pack a while back which I think helps inform from an industry level some of the issues that Playside will be facing for both WFH and OIP revenue growth.
State of Video Gaming - 2025
A pdf version of the presentation can be found here. PowerPoint Presentation.
Matthew Ball has a massive 230 page summary of the gaming industry leading into 2025 and ahead. In summary, what has been a fast growing industry is now facing some serious headwinds.
There are a few key takeaways that can be used when assessing Playside’s recent downgrades and changes to forescasts.
- Spending across the industry is flat over the last 3 years, which is short of analysts forecasts. Other media industries have continued to grow, but the numbers of gamers declining has been since Covid.
- The Industry is reacting with game cancellations, studio closures and record rates of layoffs. These types of responses from large studios are going to have a direct impact on the amount of WFH work that is out there for Playside to compete for.
- Mobile gaming time is decreasing as other media such as social video continues to grow. Global mobile penetration has also reached saturation and now grows in line with population growth.
- AR/VR growth forecasts are consistently being revised down as sales continue to miss expectations. This medium has not taken off yet. Playside has kept at the forefront here as can be witnessed by the reception of Shattered, however total sales still seem to be quite low. Their involvement in Civ VII VR also highlights their strength in this area.
- Unlike other media industries, prices for games have not grown significantly over time which has resulted in large sale price declines in real terms. Yet development costs have continued to grow as the expected production value continues to increase for AAA titles. As Playside tries to push into this area with titles like GoT they will experience more of this. (They market themselves as a AAA developer but I given their PC / Console releases to date I would still group them in the indie category)
- Although the cost of development is up comparatively, the number of games released per month on steam is also up significantly, which don’t just compete against each other, but all games previously released. Playside may need to reconsider their historical sales forecast indicators
The challenges were summarised in the following slide:
There are many many more slides in the presentation and its a highly recommended read for anyone looking at Playside or other gaming stocks.
Thanks @Bradbury and @edgescape that's great!
It's interesting to note those trends. The gaming vs social video one is interesting.
Interesting to consider exactly how much Playside competes against those kind of big budget games - they are definitely in a different category - I wonder what the spend is on games more at Playside's Tier.
Interesting to note the increased competition from foreign sources.
And yes edgescape Pay to win sucks - I pretty much quit anything that is pay to win or requires grinding to compete as well.
This was posted by Mujo earlier
What I wanted to say is the only way to make money is to make new users do in-app purchases more.
As an example, Monopoly Go (also featured in this presso) is running a Star Wars Theme with their game right now and the first thing Scopely and Hasbro did was introduce the Star Wars racer event.
Sounds fun until I realised they matched me with 3 other competitors with higher Monopoly net worth.
Monopoly Net Worth is a awards structure that is unlocked by gaining points as you complete levels and create complete "sets" on the Monopoly board.
Awards include bonuses such as more dice rolls and dice roll refresh frequency.
Back to my case, I noticed something was wrong when I could not compete with the other players even after making a few small in-app purchases to refill my dice rolls.
Then I realised the guys I was up against had higher net worth (at least double what I had!) which would entitle them to more dice rolls on the board and hence give them better chance of winning the race event.
Ahh rigged!!!
I then stopped playing and complained to game support to try and fix the competitor matching so that the net worths of competitors are similar.
Anyway that's how you make revenue from online gaming now. Make the new user disadvantaged enough to force them to open their wallets!
Definitely ethics coming front and centre here.
Luckily for me it was not "real money" but google play credit earned from completing opinion surveys about how my "shopping" at David Jones was like!