Pixel P&L: Asia's Gacha Game Obsession and the UK’s Landmark Bill Impacting Apple

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Good Morning! It’s Saturday, May 25. Today, we’re exploring how Gacha games have become a major force in the gaming industry, a UK bill that could force Apple to allow other games stores on iOS, and more. 

The Gacha Game Craze: Why Asia Can't Get Enough!

Ever heard of "gacha"? It's a digital addiction that's taking Asia by storm, transforming mobile gaming into a billion-dollar phenomenon. These games, inspired by Japan's vintage "gashapon" machines, lure players with the thrill of pulling for rare, virtual treasures. And the numbers are staggering!

Gacha games, like the smash hits "Genshin Impact" and "Honkai: Star Rail," have turned casual gamers into big spenders, raking in millions every month. In 2023, this booming market hit $480 million USD and is expected to skyrocket to $783.14 million by 2029. The secret? An irresistible blend of randomness and reward that keeps players coming back for more.

Yet, there's a dark side. Players can spend thousands trying to get their hands on the rarest items, leading to serious financial and psychological risks. However, despite the controversies, the gacha game frenzy shows no signs of slowing down with the mix of high-stakes excitement and potential for massive payouts proving to be a recipe for continued success. As this digital gold rush continues, the question remains: How far will gamers go for their next big pull?

Abhimannu unravels this digital revolution and how it's changing the gaming world in our feature about the phenomenon of Gacha Games!

UK Passes Landmark Bill: Apple and Google May Have to Allow Epic Games Store on Devices

The UK Parliament has passed the Digital Markets, Competition and Consumers (DMCC) Bill, which could compel tech giants Apple and Google to host the Epic Games Store on their devices. This legislation, fast-tracked before Parliament dissolves on May 30 ahead of a July election, aims to "regulate and increase competition in digital markets" and is set to become law later this year.

The DMCC Bill, seemingly inspired by the EU's Digital Markets Act (DMA) from November 2022, could have profound implications for the gaming industry. Among other potential changes, Apple might be forced to allow sideloading and third-party app stores on iOS, similar to the requirements under the DMA in the EU. This shift would open the door for alternative marketplaces, including the Epic Games Store, to make their way onto Apple devices.

Following this, Epic Games has already announced plans to bring its store and Fortnite to iOS in the UK by late 2025. This follows their commitment to introduce the Epic Games Store to mobile devices in the EU later this year, following the DMA's implementation. While these anticipated changes will likely be restricted to UK operations, with Apple unlikely to alter its App Store policies in the US, this legislation intensifies pressure on Big Tech and could inspire North American and Asian lawmakers to address antitrust issues more aggressively.

Report: Hyper-casual games drive ad buys, video ads reign supreme

Casual games are dominating mobile screens, with a new report from Mintegral showing hyper-casual games snagging 34% of all ad media buys. Video ads reign supreme, making up 70% of the market, but keeping players hooked remains tough—only 17% return the next day. Top games, however, double this rate at 35%. The U.S. is the goldmine for returns, with rewarded video ads outperforming other countries by a whopping 70%.

Nazara sees FY24 profit surge, but Q4 earnings plummet

Nazara Technologies reported a 21.8% rise in FY24 profit after tax (PAT) to Rs 74.8 crore ($9.1 million), up from Rs 61.4 crore ($7.5 million) in FY23. However, Q4 FY24 saw a staggering 97.8% decline in after-tax profits to Rs 0.20 crore ($24,400) from Rs 9.4 crore ($1.1 million) in Q4 FY23. Annual operating revenue increased by 4.3% to Rs 1,138.3 crore ($138.3 million), but Q4 revenue dropped by 8.1% to Rs 266.2 crore ($32.3 million). Gaming, esports, and adtech are Nazara's main revenue sources, with esports contributing Rs 631.7 crore ($76.7 million) and gaming, led by Kiddopia, generating Rs 406.5 crore ($49.4 million) in FY24.

NetEase reports strong Q1 2024 results with 7.2% revenue growth

China’s second biggest gaming company NetEase reported strong Q1 2024 financial results, with net revenues of RMB 26.9 billion ($3.8 billion), up 7.2% year-over-year. This growth was driven by the company's diverse gaming portfolio, including both long-standing franchises and new titles, as well as strong performances from its Youdao (its search engine offering) and Cloud Music segments. Youdao reported positive net income, fueled by digital content and online marketing services, while Cloud Music saw accelerated subscription growth and expanded its library through licensing agreements. 

Tencent's DnF Mobile launches strong, could revitalize its gaming revenue

Tencent’s Dungeon and Fighter (DnF) Mobile launched earlier this week with a strong opening, as the company aims to revitalize its domestic video game business. Developed by Nexon, DnF Mobile topped iOS free game downloads despite initial server issues. Tencent attributed the disruptions to overwhelming demand, highlighting the game's popularity. The company addressed the outage with a brief maintenance and compensated players. DnF Mobile, expected to generate around 6 billion yuan ($836 million) annually, is pivotal for Tencent, whose domestic gaming revenue fell 2% in Q1 2024. 

In its first weekend, Apple’s App Store saw 10 million app downloads, highlighting the immense demand for mobile applications. However, it has since grown exponentially. Today, it has facilitated over 180 billion app downloads globally, is available in 175 countries and regions, supporting 40 languages, and has generated over $200 billion in revenue for developers. 

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