Animoca Brands continues multifaceted expansion spree in blockchain gaming

Games developer Animoca Brands (ASX: AB1) has continued its gaming market emergence by declaring that it has entered into a collaboration agreement with Metaverse Holdings to co-develop two blockchain-based games for the Decentraland platform.

As part of the agreement, both companies have agreed to undertake a mutual investment of US$500,000 (A$700,000), with Animoca Brands making its investment in shares in exchange for the equivalent value in Decentraland’s MANA utility tokens.

Decentraland is an Ethereum-powered, decentralised “virtual worlds platform” offering a suite of tools designed to help users create three-dimensional content, games, and applications. The deal represents an opportunity for Animoca to develop additional features and implement them into its existing games development.

One of the key features will be that all content will be hosted and accessed via a fully decentralised blockchain platform. As part of its mission to dominate blockchain games development, Animoca recruited Ed Fries as its strategic advisor. Mr Fries is the creator of Microsoft Game Studio and co-founder of the Xbox project.

Over an eight-year period, Mr Fries grew the Microsoft Games Studio team from 50 to over 1200 employees, published more than 100 games, including multiple popular titles downloaded by millions.

Decentraland detail

In 2017, Decentraland issued an ERC-20 utility token called MANA for the purchase of goods, services, and LAND on the Decentraland platform, as part of a broader MANA token sale which raised US$26 million.

Under the terms of the agreement, Animoca Brands and Decentraland have agreed to co-develop two games which will be hosted on and accessed through the Decentraland platform.

Animoca Brands said it will leverage its relevant branded intellectual property and development capabilities to develop forthcoming games.

“We first met Animoca Brands co-founder Yat Siu after inviting him to participate as a keynote speaker at the NIFTY conference in Hong Kong. Through our conversations, we discovered a lot of affinity with our own vision for how the blockchain will transform the gaming industry through tradable, virtual goods,” said Ari Meilich, project lead for Decentraland.

Combining Animoca Brands’ expertise and ability to bring household-name IP into games with a virtual world like Decentraland is a great step forward for this nascent industry,” added Mr Meilich.

Multiple investments

In addition to its Decentraland deal, Animoca has also recently announced its intention to acquire a controlling interest in Venture Classic, the operational company for the artificial accelerator Zeroth SPC – a company in which Animoca already holds a separate stake.

The agreement announced on Tuesday was struck directly with Zeroth founder Tak Chun for a total of A$1.5 million paid for in both cash and scrip. Upon completion of the transaction, Animoca Brands will hold 67% of the equity ownership in Venture Classic.

Not stopping there, Animoca has also announced its intention to underwrite a staged investment into Zeroth SPC worth around US$2 million (A$2.81 million), paid for in cash.

Zeroth is an accelerator focusing on artificial intelligence and machine learning. The company invests in high-potential start-ups and provides operational, strategic, and networking support to investee companies as they develop their unique businesses.

In addition to its acceleration programme, Zeroth has made a number of investments in blockchain-focused companies and has said its acquisition spree is far from over.

This supplemental investment into Venture Classic’s parent company is expected to provide participants with limited partner status and grant them claims on proceeds from the cohorts of AI and blockchain start-ups accelerated by Zeroth.

“I am very excited at the chance to work with Animoca Brands to scale up Zeroth. We believe that AI will be the biggest force multiplier for technology companies in the next five years, and our trajectory is rapidly establishing Zeroth as one of the world’s most active AI investors. The strategic and managerial skillsets of Animoca Brands will greatly increase Zeroth’s operational discipline and development opportunities as we expand efforts in the AI and blockchain industries,” said Zeroth’s founder Tak Lo.

As a further sign of growing interest in Zeroth and its “acceleration” services, Hong Kong-based investment firm Sun Hung Kai & Co, has also added its interest by signing a memorandum of understanding (MoU) to develop a “deeper strategic partnership” with Zeroth SPC.

According to Animoca, this partnership may include direct investments and further potential investment into Zeroth SPC or its segregated portfolios.

Furthermore, Animoca says the rationale behind the deal is directly related to the company’s intention to develop its blockchain market capability.

Strategic rationale

The strategic investment in Zeroth’s management company is expected to increase Animoca Brands’ access and equity exposure to industry-leading AI, blockchain start-ups and their talent and technology.

The transaction will also create significant cross-selling and corporate development opportunities between the Zeroth companies, Animoca Brands, and the company’s various partners.

Sun Hung Kai & Co has already invested in Animoca Brands in the past which again highlights the interconnected nature of games development and the continuing growth seen amongst games developers in amidst the introduction of new technologies such as blockchain.

“We were impressed by Zeroth’s rise to one of the most influential AI accelerators in Asia as well as a major investor in blockchain. As Animoca Brands continues to expand its AI and blockchain initiatives, Zeroth provides us with an excellent strategic match, invaluable resources, and access to high potential ventures and technologies,” said Yat Siu, co-founder and chairman of Animoca Brands.

The flurry of news this past week has ensured Animoca shares are up 2.15% this morning, currently trading at $0.095 per share.