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.
040 – March 14, 2021
In this week’s Business of Esports Minute: Shadow Bankruptcy, Roblox Boom, and Industry Consolidation.
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.
On Tuesday, the company behind the cloud gaming platform “Shadow” announced it filed for bankruptcy in the U.S. and receivership in France. Shadow later posted a blog update confirming the company was undergoing reorganization to get rid of debt. Between the failures of Shadow and Stadia, as well as trouble at Amazon’s Luna, can we conclude that cloud gaming is dead for now? Shadow had by far the best technology in the cloud gaming space and a clearer target customer than others, and despite those advantages, they still couldn’t make the business of cloud gaming work. All of this in the context of the fastest growth the general gaming market has ever seen. The market has spoken. No one wants cloud gaming right now, and as I said years ago, it’s a solution in search of a problem.
Also, Roblox went public on Wednesday and closed the day at $69.50 per share. This means that the children’s gaming platform is valued at $45 billion. Roblox has huge potential given its platform-driven strategy. I believe they will figure out how to grow beyond their “just for kids” reputation, but they currently own that space. Their decision to go the direct listing route clearly paid off for them and it will be interesting to see if Epic follows a similar path or goes for the more traditional IPO. Either way, the current Roblox valuation is only about 2 GameStops, so in the current environment, that seems reasonable.
Finally, everyone knows Epic Games bought Fall Guys last week. This is one of many acquisitions among game developers that have taken place in the gaming world recently. In this expanding $180 billion industry, companies in the gaming industry are finding it harder and harder to survive on their own. The question is whether consolidation among game developers is a good thing for the industry or not? My view is that it’s all good. Big game developers (or big companies in general) are not set up to be innovative. They will always struggle with true innovation. Consolidation means money makes its way down to successful entrepreneurial game dev teams, encouraging more startups, and bringing innovative thinkers inside big game developers. When those people leave after their lockup periods, they have money in their pockets to go start new game dev shops, and the cycle continues. This creates a healthy ecosystem of innovation and success. Consolidation is good and is the standard lifecycle of any successful industry.
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