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Konvoy Ventures is a thesis driven venture capital firm focused on the video gaming industry. We invest in infrastructure technology, tools, and platforms.

Microsoft Partners with FB Gaming

Microsoft shuts down Mixer, Apple's mobile advertising changes, Riot Games philanthropic efforts

Microsoft Partners with FB Gaming, Shuts Down Mixer

Microsoft has decided to partner with Facebook Gaming and to officially shut down its video game streaming platform, Mixer, on July 22nd (Forbes). All of the streamers on Mixer have the option to migrate over to Facebook, yet it’s unclear whether their audiences will follow them to Facebook or simply go back to Twitch or YouTube Gaming.

A few reflections:

1) Mixer could not keep up - from 2018 to 2019 (see the two graphs below), Mixer’s market share of hours watched went from 2% to 2.6%, while Facebook had explosive growth from 3.1% to 8.5% market share. YouTube Gaming’s market share was flat (27%), while Twitch lost market share to 61% (primarily due to FB’s surge). In summary, Mixer was far in last place with no signs of that changing.

2) Microsoft + Facebook makes sense - Microsoft competes with Amazon (Twitch) and Google (YouTube Gaming) on multiple levels, especially in cloud services. Facebook is the only other viable option at the game streaming table.

3) FB Gaming is a distribution channel - Microsoft’s vision for its cloud gaming division, Project xCloud, is to reach 2B gamers. Facebook’s social platform has over 2.6B monthly active users. This is a fantastic distribution channel for Microsoft, who have already hinted at further integrations for their Xbox gaming community:

“We’re also excited about the opportunities this opens up for all Facebook Gaming creators to work closely with the Xbox ecosystem, including future opportunities around Xbox Game Pass, Project xCloud and more.” - Microsoft official announcement (Forbes)

Takeaway: Microsoft has cut its losses on the streaming side and partnered with Facebook as an ideal distribution channel for Project xCloud and their upcoming Xbox Series X release in December 2020. I think this will pan out very well for Microsoft as they focus their gaming efforts and partner externally on the social side with Facebook.

Apple Causes an Earthquake in Mobile Advertising

Apple announced on Monday that a number of new privacy features will be rolled out in iOS 14, which is coming later this year.  There were three big changes:

1) Permissioning: The most pertinent privacy feature change is requiring apps to explicitly request a user’s permission before accessing the user’s IDFA (a device’s unique mobile advertising identifier).

2) Private Dashboard: iOS 14 will introduce a privacy dashboard, which will provide information to the user on what type of information a specific app is tracking.

3) Attribution: Apple pushes app attribution to its SKAdNetwork

Eric Seufert, former VP at Rovio and often credited with being a user acquisition legend, said, “Apple's decision to essentially kill off the IDFA, while expected, is fundamentally changing how measurement is handled in mobile advertising…It's impossible to overstate how impactful this change is: almost every large mobile-first business is completely dependent on performance marketing on mobile for revenue growth.”

According to App Annie, user acquisition spend across iOS and Android is projected to reach ~$80B in 2020. Of this, gaming will account for ~30%, with the vast majority of this spending being on iOS. These new hurdles will force game studios to rethink their mobile growth strategies and tactics for acquiring new users. We will be watching closely how mobile measurement partners like Adjust, Singular, Kochava, and AppsFlyer respond to these changes.

Riot Games Sells Skins that Donate to COVID-19 Relief

Riot Games has been a good example of a corporation leveraging its platform and community for a good cause. Back in May, Riot hosted a 48-hour stream to raise money for COVID-19 relief, and, to date, has donated $4.5M to the cause.

Riot is now taking this one step further with a new initiative in League of Legends (>100M monthly active players). Players will be able to buy “skins” for characters in the game in which 100% of proceeds will go to the Riot Games Social Impact Fund. This support will go to health workers and others financially impacted by the health crisis.