Weekly News Digest #27

Activision Blizzard has acquired Proletariat

US-based multiplatform game developer and publisher Activision Blizzard (NASDAQ: ATVI) has announced the acquisition of US-based multiplatform games developer Proletariat for an undisclosed sum. Proletariat is planned to be fully integrated into Blizzard Entertainment over the next few months. The studios have been working together since May’22.

Founded in 2012, Proletariat is a 90+ developers studio, known for its three major titles across various platforms: mobile RPG World Zombination, action game for streamers Streamline, and most recently PC&console battle royale Spellbreak. Combining this development expertise with the studio’s vast experience in liveops, the Blizzard Entertainment reasoning behind the deal seems to be pretty evident.

For the company, the acquisition is the way to deal with the criticism World of Warcraft has seen lately — the latest game’s expansion Shadowlands has received negative reviews from gamers and the press alike. It is clear that in the next DLC, Dragonflight, the developers would want to show the players that their WoW subscription is still worth paying for. For this, they need to release the expansion pack in time (Shadowlands was delayed for more than a month), bring more content to the game (players criticized this as well), and bring a certain level of quality and innovation. This is also where Proletariat’s team can be useful — the developers have always experimented with the technology and genres, which can bring lots of fresh ideas to WoW. In the official press release, Activision Blizzard representatives and even Bobby Kotick himself admit the underperformance of the game and promise to bring more resources and attention to the franchise.

WoW’s setbacks are only a part ATVI bigger problems: in Q1’22 Activision saw a decrease to 100 million MAU vs. 150 million MAU in Q1’21, while Blizzard showed 22 million vs. 27 million, and King saw 250 million MAU vs. 258 million. As we wrote earlier in our analysis for Naavik, this was at least partially caused by both the relatively poor performance of the major releases, and the lack of new ones: Call of Duty: Vanguard sold worse than the previous games in the series; WoW saw a continuous decrease in the audience numbers; Overwatch 2 and Diablo IV were both postponed. Only King showed positive financial results this year, but with the same decrease in the number of active users. Negative impact and damage to reputation were caused by the public accusations of sexual harassment and discrimination among its employees. All of those factors affected public trading and ATVI stock decline.

The deal is clearly a part of the ongoing process of ATVI addressing its major problems. Some of them might be partially solved by several upcoming releases, including DIablo IV, Overwatch 2, Call of Duty: Modern Warfare 2, and the new mobile game in the Warcraft universe. Diablo Immortal just might change the picture for Blizzard as well. Though the game has received lots of criticism from players, it has so far shown a decent performance from the Revenue perspective. Considering that Microsoft and ATVI expected to close the deal before Jul’23, the companies still have time to change the way Activision & Blizzard look today — if not by more M&A, then thanks to the new releases and partnerships.

We want to thank Hiro Capital and The Games Fund for supporting this digest.

MERGERS & ACQUISITIONS

Italy-based gaming company Digital Bros, the parent company of US-based gaming publisher 505 Games, has acquired US-based games publisher D3 Go! т. As a result of the acquisition, Digital Bros will be the exclusive owner of the Puzzle Quest franchise. 505 Games will be producing updates for all D3 Go! titles, while the company will keep its entire team on board.

Canada-based blockchain consulting company NFT Tech acquires Canada-based social gaming platform Sherwa. As a part of the deal, NFT Tech will issue an aggregate of 2,500,000 common shares to the shareholders of Sherwa in exchange for acquiring all of the issued and outstanding shares of Sherwa. Sherwa’s user base will be added to the upcoming NFT Tech gaming platform, which will allow Web3 game developers to gain new users.

 VENTURE FINANCING

Israel-based software development acceleration platform Incredibuild has raised $35m in Series B funding. The round was led by Hiro Capital, with participation from an existing investor Insight Partners, which made an investment of $140m in Mar’21. The funding will go towards the platform’s operation expansion on the global market and the development of tools for AI and Metaverse projects.

Finland-based gaming company Bit Odd (newly established by Supercell veterans) has raised $5.2m in Seed funding. The round was led by Index Ventures. The funds will go towards the company’s growth and the development of mobile game titles, since the company has big plans for this market.

Germany-based Web3 platform for no-code game development and virtual gaming Soba has raised $13.5m in the latest funding. Lightspeed Venture Partners led the round with participation from FTX Ventures, Cherry Ventures, and others. The funds will go towards further developing the platform, since it’s preparing the launch for its first users and game creators.

UK-based PC&console game developer Omega Studios has raised $20m in Series A funding. The round was led by existing investor Haveli Investments. The funds will go towards scaling the team, as the company prepares for early access launch of its premier title Predecessor — MOBA for PC&console, based on the assets from Epic’s Paragon after the game was closed and became free for developers.

US-based tech company Echo3d has raised $5.5m in funding. The round was led by Qualcomm Ventures, with participation from Remagine Ventures, Konvoy Ventures, and others. The company aims to build a cloud platform for the storage and streaming of 3D, AR/VR content for all kinds of apps and games. The funds will allow the company to add more staff to the development and marketing divisions.