Warhammer series, SEGA nostalgia, China gaming and more...

A quick review of some of the latest news in the hobby market, and some other oddities

The last weeks of the year are giving us an interesting time in this newsletter's beat, so let’s do a quick roundup to see what has been going on. Of course, some stuff might be missing, but I'm happy to jump into the comments to discuss it!

Warhammer TV shows

On Monday, Games Workshop announced the signing of an agreement with Amazon for exclusive development of Warhammer 40,000 shows, and the potential development of Warhammer Fantasy shows if both parties want to. The deal includes merchandise rights for Amazon as well. Henry Cavill is involved in the project, but we still don't know the story that will be developed or any dates.

Wait… isn't that what they announced almost exactly a year ago? That, at least, seems to have been the reaction of the markets, and some fans.

And well, it is quite close, but not really. See, a year ago they were trying to finalize an agreement, and now it is signed. Given that Games Workshop is famously controlling over their IP (and as a shareholder, I can't say I disagree), and Amazon is not exactly known for being soft on negotiations, a deal was not a foregone conclusion. I suspect exclusivity over the whole 40k universe, which finally seems to have been included in the deal, was a difficult point there.

Well, what can I say, I am glad it is signed. I am sure it will mean some millions for Nottingham's most famous brigands (with Robin Hood's permission) if a show finally gets developed, and some inflation in prices for other licenses. I am not sure it will boost miniature sales though, as discussed here. I am curious to see what it means for Warhammer+ though. My guess is that animation is still not exclusive so the series will continue, and since I see it as a budget-conscious experiment in media to learn about the market, I would be glad it does.

What year is it, SEGA?

So, SEGA has decided to try and reinvigorate a bunch of their old IP, including Jet Set Radio, Streets of Rage, Golden Axe, Shinobi, and Crazy Taxi. Overall, it seems like it has been decently received, and the joint reveal trailer seems to be getting a lot of visualizations (around 2 million views¹) and a generally positive reception, although nothing outsized.

After this year's fiascos in Creative Assembly with Hyenas and the Total War problems, there are also some attempts to regain fan's trust, including returning part of the money to Total War: Pharaoh buyers, and also improving on an already sold DLC for Warhammer 3. I don't think the financial impact will be too bad (Pharaoh sold around 50k copies before the announcement according to Gamalytics), and everything seems to have been well received². At the same time, Football Manager 2024 seems guaranteed to be the most successful entry in the series yet.

Maybe things are looking up for SEGA. But then again, it usually doesn't pay to bet against their capacity to blow themselves up. They have also bought GAN, of all things.

A new Kickstarter?

CMON is launching its latest campaign for Masters of the Universe in GameFound. It is a continuation of their August Kickstarter campaign. They are also using it as a pledge manager for DCeased.

GameFound is the crowdfunding platform of a board game publisher, Awaken Realms, and it is not new. Founded in 2016, up until this year they had four campaigns going over $1M. Well, now they have 25. Sure, a couple of them are really pledge managers that come over from Kickstarter (DCeased, Monster Hunter World: Iceborne…). But the rest are not.

This comes less than two years after Ravensburger investment in the platform, and honestly, their lineup of future launches looks pretty strong. Seems like Kickstarter finally has a worthy competitor in this vertical. Part of it comes from Awaken Realms being itself a flagship of the boardgames market (they still hold positions 11 and 12 in the most funded Kickstarter boardgames ever, and they left the platform in 2020), but now heavyweights like Go On Games, Steamforged or CMON are also there.

One of the most interesting things about it is that they show the difference between the original project and amounts in the pledge manager. I always knew they were high (thanks to CMON's financial reports), but now we can see how much! And the answer is it varies wildly. Monster Hunter World: Iceborne almost doubled the £2.8M it got in Kickstarter while The Witcher: Path of Destiny only got about 20% more than the headline amount in its original campaign.

All in all, GameFound/Awaken Realms is yet another Polish company killing it. A pity they are not public.

Other news roundup!

• New online gaming regulations in China are in the works! As a result, both Tencent and NetEase have had a bad day in the stock market. Other developers are also affected of course. In my view, Gravity is one of those. We talked about the plans to launch in mainland China, and the new regulations seem to be targetted at reducing incentives for playing daily, and also limiting in-game purchases, which would affect games where the money is made on a few players that spend a lot of money in them rather than a very large player base that spends a little. Ragnarok games very much fall in both categories.

• PlayWay just completed its biggest launch yet with House Flipper 2. A bit below CMS21 in copies sold in the first few days, but at almost twice the price. The game is already more than profitable with its full zł10M³ recovered. House Flipper worked more or less as a Paradox-style game, with a very long tail of sales and gaming with DLCs and content expansion. I hope HF2 also follows that pattern, it is certainly the intention. So far, it has a bigger initial install base, so that should incentivize DLCs. It also has pretty good reviews overall. Well done PlayWay!

• And talking about Paradox, they just released Stellaris Nexus. The idea was to do an arcad-y 4x that allowed it to be a hit in online gaming. The results, so far, are pretty bad. I guess those publics don't mix well.

Closing thoughts: margins and moat

Operating margins in the video game industry vary wildly. And they are far from being a reflection of underlying quality or moat, I think. Other than SEGA's proven ability to shoot itself in the foot (we can see that only Embracer is capable of having worse margins than them some years), we don't find players with incredibly strong series like Take-Two (GTA, RDR, NBA 2k…) or Activision-Blizzard (CoD). At the top, we see PlayWay very, very consistently. And then Paradox Interactive, a bit less consistently, but almost as much.

Now, I would argue that both of them have a pretty strong moat. Paradox rules over the hardcore strategy niche with an iron hand (despite Amplitude Studios’ attempts), and PlayWay has an incredible cost-control culture. But I wouldn't place them ahead of Take-Two or Tencent. Or Nintendo, which famously doesn't try too hard to monetize, but has proven to be incredibly resilient.

It's good to look at margins, but let's not confuse them with quality or, especially, resiliency. Resiliency is usually a result of avoiding over-optimizing, which rarely results in best-in-class margins.

1. This compares to 5.6 million for the Hades 2 full trailer, 1.3 for Manor Lords’ most watched video or 2.1 for Frostpunk 2's trailer, and all of those videos have been published for far longer and have far more material.

2. Pharaoh has sold around 10% of their total copies since the announcement, and as I write this Warhammer III sits on number 35 of Steam's global top sellers (with a hefty discount as part of the winter sale campaign, but still, not bad for a two-year-old game)

3. Well, almost. 9.3 between ads and development according to PlayWay's CEO. Given they just passed 170k copies, I estimate around zł4M in profit so far, but for this style of game, I expect the bulk of sales to come after some DLCs have been released, so I think profits will be much, much higher.