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Business of Esports TV: $30 Million MMO

(Livestream 139)

In this segment, we discuss Singularity 6 raising $30M to create a new MMO.

The Business Of Esports brings you news, debates, and all the information you need to know about the gaming sector, the world’s fastest-growing market. With Paul “The Profit” Dawalibi leading the charge, and a variety of special guests, BoE TV is the only place to find insider information on the esports industry!

Check out the full livestream here:

Paul Dawalibi 1:27:23
All right, let’s talk about MMOs. I have a story here on MMOs. And startups in general in the gaming space gaming startup singularity six, raises $30 million to launch new MMO. singularity six to startup founded in 2018, raised 30 million to launch palya its new MMO game. Both of the the founders came from riot, which I’m curious why you think they would have left Riot who’s also working on an MMO to go make an MMO. But supposedly the game is going to be more what they call they compared to Animal Crossing. So like more peaceful, creative style game. I don’t know how you make an MMO that’s more peaceful and creative. But let me just read you the comment here. It’s an MMO where players get to make a new life, build their own home, find the new identity in the world, they can meet and befriend the compelling cast of characters that we paid for the world. And they can experience the evolving world narrative that we’re going to tell on a grand scale. We’re really focused on this idea that games can be for good and really help people deepen their lives. Here’s my bone to pick with this. And literally, the 1000 blockchain x gaming projects I’ve seen over the last few months, and a bunch of these kinds of stories. Why does no one seemed to care about making a fun game anymore? It’s about pay to earn it’s about doing good. It’s about deepening your life. Like can $30 million. And nowhere in here Did it say we’re gonna make a fun game, guys. It’s gonna be a lot of fun to play. Is this has this been lost? Am I crazy?

Jimmy Mondal 1:29:15
I don’t think it’s been lost per se. But I do think that there are more audiences now. And that to speak to an Animal Crossing New Horizons audience properly, you have to kind of not scare them away from the concept of a game. You know what I mean? Like, that’s what I would believe.

Paul Dawalibi 1:29:31
It’s just like, if I’m doing PK, my startup, just raise $30 million. Okay, and I’m gonna launch a big new MMO that I would like the PR I would try and put out there would be something like look, this game is so much fun. You’re gonna want to grind it for 25 hours straight, you’re gonna forget you have a family like

Jimmy Mondal 1:29:53
going for something that’s gonna be wildly successful.

William Collis 1:29:57
I really want you to make an MMO So I can watch like the YouTube commercials. I mean, it would look weird to literally rafter skin to your chair because you’re never getting up again. But I feel better my eye drops cuz you won’t be blinking.

Jimmy Mondal 1:30:16
Yes. Oh my god. But I think what they’re going for is targeting the farming audience with farming simulators like Animal Crossing New Horizon, a mobile audience and an MMO audience and tying those three things together, and it’s going to be massive. I’m just telling you, it’s gonna be huge. If they do those three things correctly. It’s over. Farming simulators lack a social aspect. It’s always been one player. Always online, I just think Jimmy

Paul Dawalibi 1:30:43
again, like put my investor hat on, they raise $30 million. Okay, my guess is this was probably at least a $200 million valuation. Probably like probably in that range would be my guess maybe more, maybe a little bit less. Let’s call it in that range. Right. Assuming these are venture type investors, which they are this business and by the way, the investors are no slouches like, right. Andreessen Horowitz is in here. transcend anthos capital, London Venture Partners. funplus. Like, these are good, smart investors. Right. But this needs to be a 234 $5 billion company. Probably 10 for like an Andreessen Horowitz to even care, given the size of the round. Can you get that with something that feels kind of nice. Like, there was nowhere in this PR that said, we’re gonna put World of Warcraft out of business guys, this game is so fun. No one’s gonna want to play Wow, anymore. Right that if I’m Andreessen Horowitz, I’m like, cool like this is this is a $10 billion opportunity. Does this feel like a $10 billion opportunity to anyone?

Jeff Cohen 1:31:57
What what’s interesting about Thailand to God,

Lindsay Poss 1:32:02
I don’t know about 10 billion, but I do obviously think that they’re trying to capitalize more on like the wellness trend than they are trying to capitalize on like, like gaming as entertainment, if that makes sense. Definitely, definitely more appeal to like the yogi animal crossings, like you just survived 2020 type audience. So I can see that narrative is crafted well being very compelling. But to your belief, it’s concerning that that narrative has taken over the fun part. You can still make a game that’s calm and you know, increases your wellness and is relaxing or whatever. That’s also fun. Like, I can still have like a little bit of excitement or jazz or like something that’s entertaining.

Paul Dawalibi 1:32:46
MMOs can’t be casual experiences. I think by definition, I Whoa, whoa, I

Jimmy Mondal 1:32:51
think you’re completely wrong. I think No,

Lindsay Poss 1:32:54
you’re

Paul Dawalibi 1:32:56
because for an MMO to work, right? You need lots of people in the game, committed to the game working towards some goal otherwise, but like telling you, you can’t

Jeff Cohen 1:33:07
just pop in to be casual.

Paul Dawalibi 1:33:09
Because how do you pop in and out for 20 minutes and have any meaningful interaction with other players? You don’t that’s not the herb, but then it’s not an MMO?

Jimmy Mondal 1:33:17
What? What

Paul Dawalibi 1:33:18
if you’re not having interaction with other players? It’s not an MMO saying you don’t pop game.

Jimmy Mondal 1:33:24
I think this is not like World of Warcraft is not a game you play for 20 minutes and put back down, right? You can’t pop back into work I have that’s why I’ve never played Wow. Because I don’t want to sit there for 30 hours before I get to the real game. I want to play it for 20 minutes occasionally here and there.

William Collis 1:33:38
I think this is your hardcore prepared a super glue your fingers to your dashboard. And we never get to

Paul Dawalibi 1:33:46
a bigger discussion around. I like I said, I’ve seen probably a dozen of these announcements from new game developers. Right? And if you if you search every single press release everyone, not one mentions the word fun. Not one.

Jimmy Baratta 1:34:01
It’s implied. It’s a game. It’s like this game is gonna be asked you’re gonna i think i think if they came out with a press release and said it was gonna be fun, we would be here make a really because I wanted to install the game that I hated. Right? Please how I feel about Call of Duty. I want to throw my computer every time I play cuz it’s not fun. No, you’re right. I think it’s attaching your

Jimmy Mondal 1:34:26
collaborative world building effort, which is what they’re talking about. You know what I mean? Like you come into this world you are going to be the farmer you own this many acres of land in a real shared space like Eve you know, they do they have cargo systems, they have logistics people that just do that. You know what I mean? So I think he was a really prime example. arming Sims is great bro.

William Collis 1:34:50
Farmville, like a baseball game from January Yeah, it’s like money like that’s my question cuz I think like Korea was a big success.

Jimmy Mondal 1:35:00
So far things like mobile is going to be the biggest thing. And of course, it being cross platform it and ever online, it will also be the continuity that you see on Steam on mobile, what have you, that’s my perfect vision for this game. And what I think it is, I clearly am operating on no sort of information more than you have. So

Paul Dawalibi 1:35:19
I can almost guarantee this game is going to fail. I can, I would, I would bet good money, this game is going to fail. And I’m sorry, because I have, you know, I have friends at Andreessen and yeah, like, I know, some of these investors, I can almost guarantee this game is going to fail, because there’s a lack of understanding of what makes an MMO work from a business standpoint, and, and what MMOs if they are persistent universes, right? You need servers up all the time. There’s an ongoing cost, it’s why wow has a subscription. Right? It’s why most of these games are subscription based, or have some kind of ongoing recurring revenue stream. This, if you take out the grind of an MMO of any, like, if you take out any kind of grind, if you make it a casual experience, why would people spend 15 or 10 bucks a month, but why does a casual

Jeff Cohen 1:36:12
lack of grind will spend money on Candy Crush like,

Paul Dawalibi 1:36:16
you know, $50, but their expectations different. They’re not no one, no one’s gonna pay a $20 a month subscription for Candy Crush,

Jimmy Mondal 1:36:24
when they pay a one year subscription. But what I’m saying is with the grind for a casual player still exists in both those scenarios, Candy Crush gets progressively harder. And farming is not easy. And you grind any there’s a time involved. And so I think the grind is still there, like it is an Animal Crossing New Horizon, you can’t hop into that game and just hope for the best you have to put time in to see timeout. And that’s why I stopped playing that game as well, because I’m not about farming games at all. But again, and the other piece here that’s missing, which I think is key to MMO success is the the high. Right? It’s the next it’s the next weapon, the next armor piece, it’s

Paul Dawalibi 1:37:02
the next,

Jimmy Mondal 1:37:04
right like easing rotating my soil. I’m telling you, these people exist. They’re real.

William Collis 1:37:11
I love what you’re saying, Paul, and I take the point, but I do think you’re reading like all of the things you want could exist in this game, you know, right? Like I and and just because I agree with you, for me, it’s all about did my sword glow blue at the end of the night? If it didn’t go blue? It wasn’t if it didn’t, if it didn’t. And if it was going blue, I needed to glow a brighter blue with sparkles, you know, right. But there are many different people who enjoy many different progress systems. And certainly, like there are plenty of people who will say, Well, I grew some strawberries, and they had plus two endurance on them. And I give them to my friend and he got another heart box. And that was a good night. You know, like, I think you’re you’re building in too much. Don’t

Jimmy Mondal 1:37:51
even get me wrong, I will never play this game. Because I don’t like farming games. But I know there’s a rabid community out there of whales that play that those kinds of games, especially on mobile platforms. So

Jeff Cohen 1:38:04
take me a step back from this specific like this exact example. I think it’s important to note No, I mean, that, obviously, is what we were talking about. But I think it’s just interesting to note like that we’re now seeing VCs like Andreessen investing, not just in gaming, because, you know, I think three, five years ago, they kind of were just on the peripheries of gaming. Now, they’re fully in gaming, and they’re investing in games. That’s something I feel like the buzzword every week, you know, every VC, well, we’re in gaming, but we’re in picks and shovels, we don’t invest in games, because it’s too volatile. Like, nobody knows what the next popular games gonna be. Well, now they’re, they’re literally just investing in game publisher, I think is weird, Jeff. It’s strange. It’s strange. To me, we’re, we’re kind of at the peak of the bubble. But

Paul Dawalibi 1:38:49
because most VCs would have told you and will still tell you this is hit driven business. As a venture investor, they’re too risky. You can’t predict the outcome of these things, right? Unless you have a huge portfolio. And Andreessen has enough money under management that they’re gonna make bets guaranteed on a dozen game developers, right? That’s I would bet good money. This is their strategy, then this is not going to be one offs for them. But what’s funny is you didn’t see this in other forms of entertainment. There were no big VCs that that became investors in movies, right? Like it just didn’t happen. Yes, there are people who invested in movies, but not traditional institutional, like venture capital

William Collis 1:39:28
economics are different on hit driven games, right? Because the movie, you sell so many tickets once and it’s done, and maybe there’s some residual DVD sales. A World of Warcraft is 25 years. It’s an actual business. Right? Like, so. I don’t know. I mean, it’s just it is but I think your point, I think Jeff has the real insight here, which is, this is the venture market and really heavy hit like basically saying, Okay, now it’s time for us to look at if games can be a viable, like output of the venture model. That’s exciting. Let’s Say, I hope it combat some things we’ve said about a lack of innovation in games, right? I hope maybe this could be the way I mean, theoretically, VC solve innovation in lots of other markets. Maybe this is the way we get triple A innovation, you know, back, not that I agree that it’s missing. I don’t necessarily agree that’s missing. But on the assumption it is, maybe this is a really good thing.

Paul Dawalibi 1:40:19
This is you know, what’s happening here, guys. And there’s there’s a lot of precedent for this. This happened in tech in mid to late 2000s, where the big companies like a lot of the big companies in tech at that time struggled. So like blackberry blew up, right? blackberry was the darling of tech, for many years, Blackberry blew up. And then you had all the top engineers from Blackberry, go and start companies. And they got VC backing, not necessarily because their ideas were great, but because they had such a tremendous pedigree. And I think what we’re seeing in gaming is very similar in that every single one of these announcements when there’s good VCs involved, the team is always like, Oh, they just left epic. They just left Blizzard, they just left riot, right. And so many of the big companies like Blizzard especially, are shedding talent. And it’s creating opportunities for these startups with well, pedigreed founders. And this is a big checkmark for venture investors. Like this is just one of those things that you go well you know, he was the head of whatever at at Blizzard This is a good bet. It’s a safe bet. And I think you’re seeing a similar cycle happening in gaming like this. So john says the solution is to pay for the grind make it free for casual that no that does not sit well. does not sit well. Other way around you want to you want you know, maybe john says separate the players. Yeah, there. There are ways I don’t think it’s ever been done successfully though. I don’t think Can you guys think of one game that has catered to hardcore and casual at the same time and monetize both effectively? Now? I just don’t think it I don’t think it’s possible. JOHN says I’m sitting at the 510 hold’em poker table over the one two table where the players are there for different reasons. Same game different stakes. Yeah. But like I said, I think in practice with gaming, it’s really hard to make the same game for two different audiences and it’s even harder to monetize them for different audiences. I don’t know I don’t know why you guys maybe think that is but I don’t think any of us could think of an example where that has worked. No. No theories. No, no.

Jeff Cohen 1:42:52
Here’s why you think at a casual I mean, not we don’t i don’t want to go back into though I just don’t understand why a casual game couldn’t work isn’t online. You know, I don’t know.

Paul Dawalibi 1:43:01
Yeah, I think a lot of kids don’t get me wrong. I think casual games can work. Just think not as MMOs but I mean, I’m, I’m willing to be proven wrong on this one. I just, I don’t think I will be.

Jeff Cohen 1:43:12
Alright, I guess I still we’ve gone through. I still don’t understand that everything. I wanted metaverse. To me. They seem they seem like the same thing. Well,

Jimmy Mondal 1:43:19
there’s Yeah. If you connected the MMOs all into one thing and everything was also there. Then the metaverse but

Paul Dawalibi 1:43:30
a subset or a precursor? precursor, maybe the best. The best word, like a simple version of the metaverse. They just I

Jeff Cohen 1:43:40
think people use the word metaverse. I think people use them synonymously or people who aren’t maybe as in tune with like, wow, like I think when Andreessen when it when an investor at Andreessen here’s massively multiplayer online use whatever. MMO they’re like, that’s a metaverse. That’s an online game. Okay, cool. Sounds good.

Paul Dawalibi 1:43:58
I they metaverse, not the metaverse. Maybe.

Jeff Cohen 1:44:04
What is what is the difference? There will always be in order for there to be the metaverse there will have to be a metaverse and then everyone will migrate to whichever a metaverse is the best metaverse.

Paul Dawalibi 1:44:15
That’s why I just described it as a cursor.

Jimmy Mondal 1:44:18
Right, right. Multiple. That’s right. Yes,

Jeff Cohen 1:44:21
that’s you’re there ever to be forever press ever to get to this metaverse world. It’s going to have to be casual, right because like, my mom is not going to want to sit in like, wow, like universe like grinding away winning sort of like a virtual world.

Paul Dawalibi 1:44:36
A true metaverse. The metaverse will have to appeal to both right we’ll have to have something for both right. Again, doesn’t exist today.

Jimmy Mondal 1:44:45
So yeah, subset like this is casual metaverse. My point

Jeff Cohen 1:44:48
here.

Jimmy Mondal 1:44:51
You just figured out what a metaverse was.

Paul Dawalibi 1:44:56
What what point Jeff

Jeff Cohen 1:44:59
it both will to exist, and this is a precursor to that eventual future that we all think we’re going to get to. Wouldn’t it be smart to invest in the casual metaverse?

Paul Dawalibi 1:45:10
you’re investing in just the game. Now there’s no metaverse here. People, people aren’t going to disappear into this world and live there and operate there. And like, there’s just there’s not enough there yet. This is not immersive enough. It’s lacking.

Jeff Cohen 1:45:26
You have to create it. Of course, there’s not like, that’s like saying, like, wow, yeah. To start somewhere. It does. And it Why not here. I don’t know.

Jimmy Mondal 1:45:38
It, right. It’s just we have to create the rest and then connect to them all into one cohesive thing. That would be the metaverse and then we could variate on the connections between these other subsets. But I think, right, you’re thinking like 100, not 100 years, I don’t know, like 50 years down the line when we’ve created so many subsets that can be merged. But it’s a very abstract concept in its nature. Like the metaverse itself. I hate when people say that word overall, when they talk about eSports, because it’s like, so what part of this are you talking about? My friend? Like, there’s a lot going on here for sure. So

Paul Dawalibi 1:46:13
there’s just like, this is just an MMO. There’s no metaverse here. It it’s so far from being a virtual universe that people could live work, play all those things in like, it’s just, it’s not, it’s not there yet. It’s just the game. For now, for now, could it evolve? They build on top of it? Yeah. But if you’re investing for that, for that into this, like, you’re betting on total unknown, like, even as even as I would be scared, if this is how that was being pitched. Because you’re 20 years away, 1520 years away, just from a technology standpoint. So like, if you’re already thinking about 10 years, or 15 years from now, versus like, Hey, what are we building like next quarter or next year? That’s, that’s a little bit worrisome. Maybe Andreessen, that’s their thesis, and maybe they’re betting on 10 different MMOs that could all become the metaverse, maybe that would be an interesting VC thesis. But any one in isolation doesn’t is not the metaverse and is far from it. They’re precursors there. They’re lacking a lot of the pieces I think so. Yeah. Wait says maybe it’s a vestibule to the metaverse. I mean, it’s good for really trying to figure out the right wording here. Yes. You know the coat check for the metaverse.

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