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Why diversification of portfolios is top of mind for gaming studios

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To drive user acquisition, all gaming companies are looking to go cross-platform and create new touchpoints for players across any type of console or game genre. To that end, we’re seeing a growing trend of consolidation among game firms. Larger studios, for example, that historically specialized in hardcore, first-person shooter games, are acquiring smaller studios to make mobile versions of those games. Portfolio diversification is quickly becoming the name of the game, and industry consolidation is something developers and advertisers should keep an eye on.

The Driving Force Behind This Trend

2020 brought a lot of uncertainty to the industry and the world at large, with many industries struggling with the lockdown. Fortunately, gaming did not and actually gained momentum among all demographics and helped us to keep connected to the rest of the world.

According to DDM market research, investments in the gaming industry reached a new high of $13.2 billion in 2020, up 77% from 2019, while M&A agreements increased to 220, up 33% year on year. 2021 is building to be an even higher record-breaking year. Some of the most notable M&A deals made this year are; EA paying $2.1 billion in enterprise value to purchase mobile game developer Glu Mobile; Microsoft’s $7.5 billion acquisition of ZeniMax Media, the parent firm of Bethesda Softworks, the creators of Doom and Fallout; Embracer Group paid $1.37 billion for Borderlands creator Gearbox Entertainment, $765 million for mobile developer Easybrain, and $450 million for porting expert Aspyr.

Why Are Larger Studios Making These Moves?

iOS 14’s data restrictions made life particularly difficult for advertisers, especially in the mobile gaming industry. Since these restrictions make it difficult for advertisers to target users with the same level of granularity of the past, the accuracy of their targeting campaigns took a hit. In addition to this, smaller studios that used to depend on monetization via larger ad platforms such as Facebook, Snapchat, and Google have a harder time doing so due to the new restrictions.

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This is worth mentioning as larger studios acquiring smaller ones is in itself a type of UA strategy. It opens up access to a new user base and a trove of first-party data. It also allows them to improve the game experience, retargeting campaigns, and access games that are already trending on the market. Larger studios can also take advantage of Apple’s IDFV (Identifier For Vendors), which allows them to cross-promote those new users.

Additionally, the acquisition of new technology also helps drive this consolidation trend. Game developers are realizing the value of vertical integration and are striving to include technology that improves customer experience and LTV. This new technology does not need to come only from other gaming companies and tends to be driven by advertising technologies.

It is now commonplace for game studios to branch out and acquire programmatic UA, monetization, and mediation platforms to bolster their product performance. A perfect example is gaming giant Zynga’s recent acquisition of Chartboost, a unified advertising platform that includes a Demand Side Platform as well as Supply Side Platform and mediation capabilities. Combining a large gaming portfolio and advertising capabilities is the next step for the development of the next generation of mobile advertising with high-quality content, direct player relationships, massive reach, and full-stack advertising technology.

Due to the recent onramp surrounding blockchain gaming recently, companies should also keep an eye for new trends like the metaverse and the advancement of high-value digital assets that exist only virtually, such as cryptocurrency and non-fungible tokens. The Blockchain market size is projected to grow from $4.9 billion in 2021 to $67.4 billion by 2026. In order to grab a share of this recently new market, gaming companies will have to divulge their triple-A game-making skills as well as their IP onto this model. Also for those who have the power and money a quicker way to get to this market first could be by acquiring existing companies, which makes perfect sense since M&A deals are at an all-time high.

Ad Networks Are Also Expanding

It is not only large game studios that are making moves, but ad networks have joined in on the trend. Many ad tech firms have successfully branched out into mobile gaming, and this trend is expected to continue. Gaming divisions can be viewed as a revenue generator for an ad-tech firm, implying that it will be adequately resourced and that its performance will be directly tied to new revenue streams.

In the absence of mobile advertising identifiers like the IDFA, another factor driving ad networks’ consolidation strategies is the competitive advantage that proprietary ad serving infrastructure will provide in portfolio strategy, yield management, and user engagement optimization. Without that kind of third-party data, first-party data becomes much more important.

Furthermore, to serve all the needs of developer clients, ad networks should develop their full suite of products, solving all sorts of client pain points. Building a full-stack solution through UA, monetization, creatives, mediation, and in some cases even attribution will help to target and retain more valuable users and drive down operating costs.

Lastly, if ad networks are able to help developers in more aspects of their life cycle, they will inevitably generate more revenue. Offering multiple solutions and diversifying your revenue is a key driver for stock price outlook and projected future growth. Companies such as AppLovin, Unity, and Digital Turbine are already publicly traded companies, and Vungle is getting ready for their IPO, so more acquisitions may be in their future before leading up to the IPO.

Takeaways

The pandemic-fueled gaming market, a heated investment environment, and major studios attempting to raise their UA in a post-IDFA reality are the main underlying elements driving most of 2021 consolidation efforts.

To stay competitive in a new privacy-centric world, game developers and ad networks have expanded their portfolios to include gaming and mediation. Any strategy that helps a corporation get a competitive edge by bringing in more legitimately collected data that does not need to be acquired elsewhere or shared with others is always a good one.

Ad networks are adding gaming studios, mediation platforms, and even MMP’s to diversify their portfolio and deliver more solutions to clients. This also offers the opportunity to acquire first-party data in a post IDFA world. All of this in turn drives revenue and stock prices up.

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Amazon may lay off 20,000 employees, including managers: Report

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Amazonmay lay off about 20,000 employees across divisions as the company reevaluates its pandemic-induced hiring spree, according to a media report.

A Computerworld report stated that the tech giant could lay off employees across the company, including distribution centre workers, technology staff, and corporate executives. Staff at all levels will likely be affected, it found.

Last month, the New York Times reported that Amazon plans to lay off approximately 10,000 people, and “the cuts will focus on Amazon’s devices organisation, including the voice-assistant Alexa, as well as at its retail division and in human resources”.

However, according to Computerworld, the layoffs could impact nearly double the number of employees– roughly 6% of the company’s corporate employees and about 1.3% of its global workforce of more than 1.5 million composed primarily of hourly workers.

YourStory could not independently verify the report.

Corporate staff have been told that employees will receive a 24-hour notice and severance pay, in accordance with their company contracts, the Computerworld report noted. “There is a sense of fear among employees in the company as the news has come out,” the report added, quoting a source who was informed directly about the layoff effort.

The layoffs would be the largest staff reduction in Amazon’s history.

“There is no specific department or location mentioned for the cuts; it is across the business. We were told this is as a result of over-hiring during the pandemic and the need for cost-cutting as the company’s financials have been on a declining trend,” the source told Computerworld.

After the New York Times report, Amazon Chief Executive Officer Andy Jassy shared some information about role eliminations in a note. Jassy confirmed that layoffs were occurring, though he did not specify the planned number of employees to be laid off.

“Our annual planning process extends into the new year, which means there will be more role reductions as leaders continue to make adjustments. Those decisions will be shared with impacted employees and organisations early in 2023,” Jassy wrote in the message, noting that Amazon had already communicated that layoffs would occur in the Devices and Books businesses, and would be extending a voluntary reduction offer for some employees in the People, Experience, and Technology (PXT) organisation. 

“We haven’t concluded yet exactly how many other roles will be impacted (we know that there will be reductions in our Stores and PXT organisations), but each leader will communicate to their respective teams when we have the details nailed down,” Jassy noted.

Meanwhile, the Computerworld report noted that employees on Amazon’s robotics team have been laid off.

Amazon’s muted third-quarter earnings as well as disappointing fourth-quarter projections led the company’s stock to plummet. Its third-quarter earnings were severely impacted by unpredictable consumer shopping habits and inflation. 

Amazon is likely to lay off several employees in India across divisions, according to media reports. Last month, Amazon confirmed that it will shut down its wholesale unit Amazon Distribution. This is the third business unit to be closed after the e-commerce giant announced the wrapping up of Amazon Academy and the food delivery business in India.

Globally, tech companies have announced layoffs as part of their cost-cutting efforts. In November, Meta CEO Mark Zuckerberg announced that the company had decided to reduce the size of its team by about 13%, cutting over 11,000 jobs. In the same month, Elon Musk reduced half of Twitter’s workforce or about 3,700 jobs at the social media firm.

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Unlock The Entrepreneurial Potential Of Your Team With Employee-Ownership

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A strong team of many outperforms even the most hardworking of entrepreneurs on their own. But when hiring employees, freelancers and contractors, how do you ensure they have the same entrepreneurial skills and drive that you do as your company’s owner? Is it unrealistic to expect employees to be motivated and committed to an organisation they didn’t found?

Nicki Sprinz thinks she has cracked the code of unlocking the entrepreneurial potential of your team, and the answer lies in employee ownership. Sprinz is managing director of B-Corp certified ustwo London, a company of over 200 employees, and cofounder of Ada’s List, an 8000-strong community designed to support women working in the tech industry. ustwo has recently become employee-owned and has already seen the benefits of breaking down the distinction between owners and employees.

According to the Employee Ownership Association, this way of working can improve productivity, support more resilient regional economies and empower team members, resulting in them being far more engaged. Sprinz explained the main benefit for entrepreneurs of this model along with practical tips for managing directors and company founders to make the transition to becoming employee-owned.

Employee ownership protects the company

“Being employee-owned means existing team members, who are now partners, feel empowered as owners,” said Sprinz. She believes that this encourages everyone to put in the work to uphold a strong company culture and course-correct if they see anything awry.

Whilst this might not happen automatically, a founder can make it more likely that their team upholds the vision. Sprinz has put frameworks in place to ensure everyone has a voice. “We hold open firesides, have elected partner representatives on the board, and ensure there are regular channels of communication for all team members to be part of growing the culture and living the values,” she said.

Keeping the team on board means protecting the company. “There are no surprises about the direction we are taking with the business,” explained Sprinz. “We involve everyone in the decisions we make on our projects and ensure we are accountable, both commercially and ethically.”

Attract and retain top talent

In a competitive market, how does your company attract and retain the best talent in the world for the benefit of your clients? Employee-ownership could be the solution. Not only does it make job listings stand out, but it attracts individuals who are like-minded and think long term. They are committed to a future with whichever company they choose to join and are prepared to push themselves to make it happen.

“High quality potential recruits and employees are interested in values and purpose,” said Sprinz. “Being able to talk about employee ownership helps you stand out in a tough hiring market. We have several interview stages so a candidate can get to know us as well as we’d like to know them.”

Sprinz’ interview stages aim to weed out “cultural and value mismatches that ultimately lead to an unfulfilled team.” They ask candidates multiple questions about their values and examples of them in practice, and they encourage candidates to probe with questions about ustwo. They also “publicise the salary for all open roles and candidates have the opportunity to meet other members of the team,” she added.

Control quality

When scaling a business, ambitious entrepreneurs cannot afford to let quality slip. Growth at all costs is a false economy that ends with the business back at square one and having to work harder to undo reputational damage. “A more entrepreneurial team ensures quality stays high,” explained Sprinz. Not only do your team members care deeply about the work they do, they also know they benefit from company growth, so they are incentivised to keep raising the bar.

“If your team is invested in the long term financial success of the company, they also feel pride that their work contributes to overall success,” said Sprinz. “They respond by raising the bar on their work.” Sprinz also believes that, “Regular transparent sharing of financial results and metrics maintains dialogue on personal and company impact.”

Direct the future

An employee-owned company has options for the future. The owner might one day want to step aside or sell, and the company’s succession plan will already be in place. In the meantime, the company has hit new heights and progressed with new ideas because its foundations are solid.

Like Maslow’s Hierarchy of Needs, you cannot reach self-actualisation without warmth and shelter, and a company cannot break through ceilings with constant recruitment issues. When team members are bought into the company, they are bought into its future too, making more certain outcomes for everyone involved.

“The partner representatives on the board surface the priorities of the rest of the team and ensure the conversations of the board are directed accordingly,” explained Sprinz. “The representatives are actively part of the bigger picture and playing a huge part in shaping the company’s future.”

Unlock the entrepreneurial potential of your team by exploring employee ownership, advised Sprinz. The best people will be proud to tell their friends that they are part-owners of the place they work. They will feel valued and listened to and respond with their effort and devotion. Could employee ownership be the right step forward for you?

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With $3M new funding, Egyptian startup OneOrder sets out on growth drive • TechCrunch

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OneOrder, Egypt’s supply chain solutions provider for restaurants, has raised $3 million seed funding led by Nclude with participation from A15, and Delivery Hero Ventures. The latest funding brings the total funding raised by the startup to $10.5
million, including $6.5 million working capital financing from financial institutions.

Launched in March this year, OneOrder makes it possible for restaurants to order food supplies through its online platform, solving the fragmented supply chain challenges that lead to erratic prices, waste, quality issues, and storage cost.

By using its platform, restaurants no longer have to deal with tens of suppliers, and can order only what they need, for next day delivery, stemming wastage and doing away with the need for warehouses. The platform also ensures operational efficiency and helps restaurants save money by leveraging OneOrder’s economies of scale.

The startup plans to use the funding to scale its operations in Egypt including increasing its warehouse footprint, and to explore growth opportunities within the Gulf Cooperation Council (GCC) region, and Africa.

“We are exploring Saudi Arabia and expanding south into our continent. I think Africa has a lot of markets that feel the same pain points that Egypt does,” said OneOrder co-founder and CEO, Tamer Amer, who co-founded OneOrder with Karim Maurice (CTO), also founder Cube, an online restaurant-reservation service.

“The solution that we’re providing has shown that this industry is ready for tech solutions…[and] we are working on a more substantial operating system for the restaurants not just the supply chain and inventory management system, rather the full cycle that would turn their operations automatic by using AI and machine learning capabilities to drive the supply chain,” said Amer, a restaurateur for over two decades, initially in the U.S before settling in Egypt from 2008.

Amer, told TechCrunch that the sourcing challenges he experienced operating two restaurants in Egypt — Fuego, a sushi bar, and Longhord Texas Barbeque — inspired the launch of OneOrder, to serve the country’s total addressable market of 400,000 restaurants.

“I had always taken the supply chain in the U.S for-granted; we would order and get the supplies all the time. We didn’t have to worry about shortages or price changes. I realized that Egypt is so underserved and the industry is really doing a lot of things that we shouldn’t be doing,” he said.

“… restaurants should not have a full-time job monitoring the supply chain and procuring products because it takes away focus on the core business, which is serving customers. So that’s where the idea really started,” he said.

OneOrder plans to, through its partners and backed by its extensive data, begin extending working capital financing options to restaurants as a way of helping them scale their operations.

Basil Moftah, the managing partner at Nclude, said: “The product-market fit of the OneOrder solution is very impressive, along with the positive impact it is delivering to all stakeholders in the value chain. Through the use of technology and alternative data, OneOrder’s embedded financing will help underserved clients who are unable to secure traditional financing. This aligns perfectly with our investing philosophy and we are glad to be embarking on this journey with the team.”

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