Brexit, M&A and VR exclusivity

Weekly roundup: Tencent extends its empire as Britain chooses isolation

Feature by Dan Pearson Contributor

Published on June 24, 2016

It's hard for anyone in Britain to think of much other than the results of the referendum today, so let's start this week's news recap with a look at analyst's predictions of how Brexit is going to affect the games industry, both within the UK and elsewhere.

Generally, the feeling is that it's going to be a net negative effect, putting UK businesses at a significant disadvantage when dealing with our biggest export customer. Veteran spokesman Ian Livingstone said that losing the UK's seat at the negotiation and legislation table is going to have a hugely detrimental effect. "If we are not at the table we have no voice on how this market is being shaped," said Livingstone. "EU consumer law, competition law, copyright law, audio-visual content regulation, data protection law are all being reviewed, with the role of games-critical online platforms also coming under scrutiny."

EGDF chairman Hendrik Lesser agrees, although he doesn't see Brexit having too much impact on the industry in Europe. "Honestly I think that non-British companies are not that affected too much," said Lesser. "I fear the worst for you guys, I don't fear so much for the others. The European market through the EU is still big enough and UK would be crazy to install additional barriers to enter that market. Entertainment is strong in the UK, so they have a self interest to keep this open and going."

"In fact, contributions from Supercell will more than double Tencent's overseas income, making this the most aggressive and significant move into the international market yet"
Rob Fahey

Both TIGA and Ukie were keen to focus on the future, issuing statements urging domestic developers to make the most of the inevitable.

Looking beyond the horizons of the UK, which today seem alarmingly close, this week has seen some significant M&A activity. Topping the bill is Tencent's acquisition of Supercell from SoftBank in a deal which values the Finnish studio at $10.2bn. Rob Fahey says that the Chinese firm is unlikely to try to fix what isn't broken, given its track record with Riot and Epic, but its existing mobile market share may make fiddling a lot more tempting, especially given the scale of the buy.

Vivendi was in the news again, creeping its ownership of Ubisoft shares up to 20%. Having completed its acquisition of Gameloft last week, resulting in the departure of CEO and founder Michel Guillemot, Vivendi said that its not looking to do the same to Ubisoft just yet, instead issuing a call for a "fruitful cooperation."

"Vivendi's investment in Ubisoft's business sector is part of a strategic vision of operational convergence between Vivendi's content and platform and Ubisoft's productions in the field of video games," a statement read. Scant comfort for Yves Guillemot and his board, one suspects.

"We regularly offer developers financial grants to help fund early development of new titles to accelerate development or expand the scope of the game. In some cases, we exchange funding in return for launching on the Oculus Store first"
Oculus statement on exclusivity

In VR news, much was made of an apparent offer from Oculus to part-fund Croteam's Serious Sam VR title, which developer Mario Kotlar made a point of public discussion after posting on Reddit about Croteam's rejection of the timed-exclusivity it would involve. Cue a rapid series of explanations from Oculus and Croteam alike about the nature of that deal, whilst several other developers weighed in on the relative pros and cons which exclusivity agreements can bring to an emerging platform. Oculus' Jason Rubin made his position clear, reiterating that he feels that the development cash which accompanies such deals is essential for a healthy software ecosystem.

"As a developer looks at a multi-million dollar production in VR right now," explained Rubin, "they say there's no way that will earn its money back in any reasonable amount of time, so instead I'll go make a non-VR PC game of that scale if I want to because that's a better bet. We don't like that."

Elsewhere, Star Citizen made some changes to its returns policy which ruffled the feathers of many who were already concerned about the ability of Roberts Space Industries to meet the promises it has made to its army of backers. Under the new rules, refunds will become significantly trickier to obtain for new backers, although existing supporters will follow the old conditions, able to seek remuneration after the company misses a deadline by 18 months or more...

Also on GamesIndustry.biz this week:

Peter Moore details EA's considerable plans for eSports engagement;

Sony and Microsoft were almost neck and neck in E3 coverage numbers;

Hello Games settled a case with Rupert Murdoch's empire over the name of No Mans Sky;

and both the Angry Birds and World of Warcraft movies showed great promise for cinematic adaptations of gaming IP.