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08-09-2022, 12:25 AM
(This post was last modified: 08-09-2022, 05:26 PM by EnSabahNur.)
Thanks for the information! Very useful
Looking at the Google Trends data, it looks like a problem afflicting the gaming genre, rather than a Garena issue.
It could be related to pull-back from consumers, which saw a spike in gaming revenue during lockdowns, and dropped back as they spent more time outside the house post lock-down.
I agree that games are hits driven, but if we take a more nuanced look, this risk applies mostly to the "traditional" games such as Civilization. You launch a game, hope it does well. If it is popular, you rake in $$$, and then work on Civ 2. IF not, your studio is at risk of shut-down.
Most big game developers are moving to a SaaS like model where possible, where they deliver continuous updates to prolong the life-span of the game.
Back to Sea, the drop in Digital Entertainment is quite alarming. it is possible that the DE bookings in 3Q2022 may be half of 3Q2021 if this trend continues. I wonder if they are doing anything to rejuvenate the IP. That's what competitors will be doing. League of Legends and Dota for example, has shows on Netflix.
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(08-09-2022, 12:25 AM)EnSabahNur Wrote: Thanks for the information! Very useful
Looking at the Google Trends data, it looks like a problem afflicting the gaming genre, rather than a Garena issue.
It could be related to pull-back from consumers, which saw a spike in gaming revenue during lockdowns, and dropped back as they spent more time outside the house post lock-down.
I agree that games are hits driven, but if we take a more nuanced look, this risk applies mostly to the "traditional" games such as Civilization. You launch a game, hope it does well. If it is popular, you rake in $$$, and then work on Civ 2. IF not, your studio is at risk of shut-down.
Most big game developers are moving to a SaaS like model where possible, where they deliver continuous updates to prolong the life-span of the game.
Back to Sea, the drop in Digital Entertainment is quite alarming. it is possible that the DE bookings in 3Q2022 may be half of 3Q2021 if this trend continues. I wonder if they are doing anything to rejuvenate the IP. That's what competitors will be doing. League of Legends and Dota for example, has shows on Netflix.
That's not entirely true. Which is why I chose the 2 other examples, Fortnite and Genshin Impact. Both are considered "live service" games (sometimes marketed to investors as GaaS or Games as a Service) that constantly receive updates throughout it's life cycle, as long as players continues to play them.
However, despite launching at different years and time periods, still experience initial hype, follow by eventual decline. I can pull up any era defining live service games in the past (WoW, Candy Crush etc) and the result will generally be the same.
The Covid lockdowns did had impact to user numbers (e.g. tough comps); but such cycles (launch, initial hype, decline) are still the norm for games.
The exception are "proto-metaverse" games (Fortnite is also considered as one), that appears to buck the trend. A topic for another day.
![[Image: ECe5pzs.png]](https://i.imgur.com/ECe5pzs.png)
Sea can keep updating Free Fire, but statistically, it's hard to revive a game franchise that lost its initial hype. Free Fire can be the exception to the norm, but I do not have enough insights to make that determination.
(vested in Roblox)
“If you buy a business just because it’s undervalued, then you have to worry about selling it when it reaches its intrinsic value. That’s hard. But if you can buy a few great companies, then you can sit on your ass. That’s a good thing.” - Charlie Munger
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However, despite launching at different years and time periods, still experience initial hype, follow by eventual decline.
I get what you mean, this is the life cycle of gaming products. I may have misunderstood your initial point about risk of launching games. I thought you were referring to traditional games but you were making a point about GaaS products in general, will not be able to resist the decline stage
The exception are "proto-metaverse" games (Fortnite is also considered as one), that appears to buck the trend. A topic for another day.
Actually if you can, it would be interesting to understand how these are different from "normal" GaaS. Is it the constant updates to the product and introduction of new features?
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Google trend is the frequency of search in Google?
Just thinking out loud, if the game is new, new gamers searching for it to onboard the game right?
After it stabilizes, the existing gamers no longer search for their already familiar games?
If the community of the game is already established and players spending over times, I reckon it's not so bad.
Best is of course like Minecraft whereby each new generations replacing the old ones (Juniors replacing their Seniors like in school). But even Mobile Legends, Dota2, Honor of Kings, the community is there and they are doing quite well.
Not sure I'd want to rely on Google trend to determine how well a game is doing.
My views are your Gilbert & Sullivan's:
"The flowers that bloom in the spring, have nothing to do with the case".
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08-09-2022, 10:00 PM
(This post was last modified: 08-09-2022, 10:05 PM by Wildreamz.)
(08-09-2022, 08:35 PM)ksir Wrote: ..
Not sure I'd want to rely on Google trend to determine how well a game is doing.
1. Google trends should not be the be-all and end-all if you are researching on how well a game is doing. It's a quick and dirty proxy for hype and interest (including sustained community engagement). More granular data can be found from both public and private data. For example: https://activeplayer.io/garena-free-fire/
For the case of SEA, the guess work can be eliminated, since they publish their DAU, MAU and bookings every quarter.
2. An added comment about live service games/GaaS ( https://en.wikipedia.org/wiki/Games_as_a_service): it's still a great source of predictable income for gaming companies in recent years. It enables gaming companies to monetize their IPs over many years. It brought EA from $4bil market cap in 2012 to $34 billion today. The difference between EA and Sea is they have a portfolio of diversified and proven IPs that they built over the years.
3. On "proto-metaverse": It has been much discussed by metaverse and gaming experts. I will post a couple resources:
https://www.statista.com/chart/27052/sha...ix-months/
https://www.matthewball.vc/all/themetaverse
https://debugger.medium.com/the-metavers...9c89ed8ba2
I have also covered it briefly here: https://www.valuebuddies.com/thread-1649...#pid164054
Simply put, these "games" are not a simple objective-based game in and of itself, but an ecosystem of gamers, independent developers (who create User-Generated content (UGC); the key difference from GaaS games that relies solely on the Game Studio itself to generate new content), and content creators (e.g. youtuber, streamers etc). In theory, they are platforms that can continue to grow over the years (the hype doesn't simply dies), and strengthens as more user/creator/developers join the ecosystem (network effect/flywheel effect).
“If you buy a business just because it’s undervalued, then you have to worry about selling it when it reaches its intrinsic value. That’s hard. But if you can buy a few great companies, then you can sit on your ass. That’s a good thing.” - Charlie Munger
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Hi Wildreamz,
Thanks for providing more information on Garena (DE segment). My observations from Garena's stats is that this quarter's loss in active players is much higher than the loss in Q2CY2022. Secondly, Free Fire has been losing active players since May 2021. The max players log in has declined.
This bears resemblance to other games I had played in the past which employs a technique of having a large free 2 play player base; the hype dies off and only the core players remain. Sea definitely has to plan a future where the DE profitability becomes a smaller profit generator instead of the US$1-2 billion it generates now.
The real problem is Shopee that is growing without care to margins and burning the most cash. At its growth trajectory, in 2 years, Shopee will bankrupt Sea Group and force existing shareholders to suffer massive dilution which I am confident will crater the share prices to single digit
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(09-09-2022, 12:13 PM)CY09 Wrote: ..
The real problem is Shopee that is growing without care to margins and burning the most cash. At its growth trajectory, in 2 years, Shopee will bankrupt Sea Group and force existing shareholders to suffer massive dilution which I am confident will crater the share prices to single digit
Not necessarily. The bull case is that, Sea can continue to execute brilliantly and publish/acquire new exciting hit IPs and hit updates to existing IPs, year after year, until it scales to the size of EA/Tencent.
Whether or not this is the likely scenario, requires deeper insights to Sea's capabilities/competitive advantage as a game publisher/studio. Which I do not have.
(Not vested)
“If you buy a business just because it’s undervalued, then you have to worry about selling it when it reaches its intrinsic value. That’s hard. But if you can buy a few great companies, then you can sit on your ass. That’s a good thing.” - Charlie Munger
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09-09-2022, 03:41 PM
(This post was last modified: 09-09-2022, 08:36 PM by CY09.)
https://www.reuters.com/business/retail-...lang=en_US
Shopee Cost Cutting has started. Good news operationally but this is probably the end of its growth story
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15-09-2022, 01:50 PM
(This post was last modified: 15-09-2022, 01:52 PM by CY09.)
https://www.theedgesingapore.com/news/co...uts-spread
Sea is proceeding on further cost cutting measures. While cash flow positive is its target, I don't think it will be easy to meet. Pareto principle will suggest to reduce cash burn, Shopee operations of negative margins has to be the party to be culled; however, Sea seems to be targeting the 20% not the 80%.
Wonder how long before Shopee becomes the target again. One key area is the selling of $0.10 or $0.99 items with free delivery. I wonder how the platform makes money when delivery is free
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15-09-2022, 07:37 PM
(This post was last modified: 15-09-2022, 11:07 PM by dreamybear.)
(15-09-2022, 01:50 PM)CY09 Wrote: https://www.theedgesingapore.com/news/co...uts-spread
Sea is proceeding on further cost cutting measures. While cash flow positive is its target, I don't think it will be easy to meet.......
Wonder how long before Shopee becomes the target again. One key area is the selling of $0.10 or $0.99 items with free delivery. I wonder how the platform makes money when delivery is free
“....With investors fleeing for ‘safe haven’ investments, we do not anticipate being able to raise funds in the market,” Li said, reiterating that the company’s primary objective for the next 12 to 18 months is to achieve positive cash flow as soon as possible...."
Seems to be a race agst time now. Other than operations optimization, perhaps corporate actions e.g. M&As might help its prospects.
On Shopee ....
Well, there are also vouchers for consumers.
I think u also mentioned having gotten something free.
The interesting thing is - referring to the CIMB's research report, EBITDA loss per order for SEA mkt is down to US$0.01 in 2Q22.
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