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Business of Esports Minute 012 – Digital vs Physical, Facebook Accounts for Oculus, Take-Two Mobile

A week of news covering the intersection of business and gaming / esports, all in about one minute – everything you need to know from the “profit of esports” himself. 

012 – August 23, 2020

From the keyboard to the boardroom, this is the Business of Esports Minute! Every single week, I, Paul Dawalibi, the prophet of esports, will be bringing you my hottest takes from the week, basically everything you need to know about the business of esports all in about one minute. Let’s go.

This week marked a milestone that I’m sure many of you thought happened a long time ago. For the first time, digital game sales outnumbered physical sales. Let that soak in. We are in the year 2020, not 2012. Signs of this eventuality have been manifesting for years, but sales figures from Playstation 4 and Xbox One confirm that the shift has just happened. This shift should accelerate, limited only by access to fast internet speeds everywhere.

In more unfortunate news, Facebook announced this week that you’ll need a Facebook account to use future Oculus headsets. It’s an obvious data gathering play on Facebook’s part, but the timing of such an announcement is poor given how much antitrust scrutiny Facebook is under from the US government. Also, the founder of Oculus had previously promised that such an integration would never happen, but he is no longer with the company, and therefore doesn’t have any say in the matter. I suspect that Facebook will get a lot of backlash for this decision and will have to backpedal in some way. For those of you who remember Blizzard’s attempted “Real ID” rollout, this might be a similar moment for Facebook, where a very obviously poor and anti-consumer decision is rolled back after public outcry. 

Finally, Take-Two Interactive acquired Playdots this week for $192M. Playdots is the developer of popular mobile games such as Dots and Two Dots, and their games have been downloaded over 100M times. Playdots was spun out of betaworks with $10M in funding from Tencent and Greycroft. Take-Two is paying $90M in cash and the remaining $102M in stock. This is not a surprising split given how much Take-Two’s share price has appreciated recently. They have a valuable currency for acquisitions. What is more surprising is that Take-Two has historically been focused almost exclusively on IP-rich story-driven single player experiences. Buying a company that makes hyper-casual mobile games seems completely antithetical. My view is that Take-Two is likely bowing to pressure from Wall Street analysts who look at EA and Activision Blizzard and point out that they both drive significant revenue from mobile. For Take-Two to stay competitive and remain in the conversation, Playdots was the answer. However, I personally would have loved Take-Two to go deep and contrarian instead, acquiring developers which fit their current focus.

For far more detailed insight and discussion into the business of esports, as well as the most exceptional line-up of guests, please tune in every week to the Business of Esports podcast and every Wednesday evening into the Business of Esports after-show livestream. Also make sure to follow us on Twitter @bizesports and on YouTube at The Business of Esports.

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