Summary

Eric’s excellent presentation on the video gaming sector was structured around three central topics - Apple’s decision to remove the IDFA from the mobile gaming system, the holiday expectations and also his views on the next-gen cycle. Eric suggested that Apple’s removal of the IDFA was a devastating blow to the mobile gaming ecosystem. There is no main alternative and Apple has not negotiated anything with other gaming partners. However, there is some good news in that Google will most likely not follow Apple’s path in removing the IDFA from their systems. Moreover, alternatives exist, and Facebook may even step in. Despite these small positives, overall, this move by Apple is a catastrophic blow to many, as the IDFA is the backbone of performance user acquisition (UA). Mobile publishers will be most affected who have built their businesses around hyper-targeting for the last 6-8 years. Eric forecasts that for most games we will see higher UA costs and lower LTVs, ultimately squeezing the margin for most of the publishers. Regarding holiday sales, during COVID, we saw a large surge in sales, but these are starting to dissipate. Although some games are delayed, the big games are still highly anticipated - Assassins Creed, Madden and FIFA. Eric was concerned for this year’s holiday releases as they are all due around the same two-week window in the first half of November, so users will not be able to consume all the content that is going to be published. Eric believes that Cyberpunk will prove to be a short-term hit only, ultimately failing to live up to expectations. Call of Duty will also underperform - lower quality due its release being rushed. Meanwhile, EA games such as Madden and FIFA, where there is constant and solid demand, will be less affected. The strength in sales of the PS4 and Xbox One, may hinder the sales of the new-gen consoles developed by Sony and Microsoft. There is simply not a big enough upgrade between the PS4 and PS5 to justify an upgrade for many. Definite headline risk is that there will not be as much in hardware sales in year two and year three. Eric closed his talk by delving into each of the major publishers and discussing management teams; he is bullish on the short term prospects of all the publishers and remains bullish on the long term potential for EA, Ubisoft, Zynga and Nintendo, but is cautious on Activision and Take-Two.

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