Animoca signs deal to extend Crazy Kings reach in China

Games developer Animoca Brands (ASX: AB1) is looking to the Far East to boost commercial returns from its popular mobile game, Crazy Kings.

This morning, Animoca said that it had secured an exclusive licensing agreement with Beijing Bosi Interactive (BBI) for the company to distribute the Android and HTML5 versions of Crazy Kings in China for an upfront consideration of RMB 5.1 million (A$1 million) plus monthly revenue sharing.

Crazy Kings is a tower defence and collectable-card fantasy mobile game developed by TicBits Oy, Animoca’s Finnish mobile games subsidiary.

The deal could be significant and could extend Animoca’s growing mobile gaming footprint given BBI’s influence in China.

BBI is a mobile games distribution and marketing company with established relationships and licensing arrangements with the three major Chinese telecom companies: China Mobile, China Unicom, and China Telecom – and serving around 1.5 billion consumers on mobile and fixed-line carriers between them.

Under the terms of the agreement announced today, BBI will become the exclusive distributor in China for the Android and HTML5 versions of Crazy Kings, excluding the territories of Hong Kong and Macau.

Animoca Brands will receive an upfront consideration of RMB 5.1 million (~A$1 million), which is expected in the current quarter and is entitled to a share of monthly revenue generated by the Android and HTML5 versions within China.

Animoca says that the Android version of Crazy Defense Heroes (the sequel to Crazy Kings) “is progressing on schedule and will be completed around the end of the current quarter.”

Animoca develops branded mobile games and has gradually expanded its in-house games catalogue over the past 18 months including the launch of Crazy Defense Heroes and Crazy Kings, but also, acquiring gaming companies in their entirety – Tribeflame, Fuel Powered and Zeroth.ai were all acquired in the past year as part of Animoca’s growth and development.

In addition to its headline titles such as Crazy Defense Heroes and Crazyy Kings, Animoca also develops products based on popular intellectual properties such as Garfield, Thomas & Friends, Ever After High and Doraemon. Additionally, Animoca Brands is the exclusive China distributor of CryptoKitties, a new gaming innovation that includes cryptocurrency functionality.

CryptoKitties was released by Axiom Zen in November 2017 and spun out into a new company called Dapper Labs in February 2018, raising $12.85 million from leading investors including Andreessen Horowitz, Union Square Ventures, and the founders of Dreamworks, Reddit, Coinbase, Zynga, and AngelList.

Gaming result

The Crazy Kings franchise has been particularly fruitful for Animoca with the company reporting cash receipts totalling A$3.4 million for Q1 2018. Notably, Animoca’s headline revenue figure represents a 55% year-on-year increase compared to Q1 2017.

The strong result was mostly due to the Crazy Kings franchise generating the lion’s share of its earnings: $2.8 million since launching Crazy Defense Heroes in January 2018.

Crazy Kings is already published globally for Apple iOS devices with Android and HTML5 versions expected to be completed “in or around the middle of 2019”, according to Animoca.

HTC in China

Animoca’s activities in China don’t stop with software and its distribution.

From a hardware perspective, Animoca has agreed on a deal with HTC to develop opportunities for business collaboration including product development and to work together in areas such as blockchain, artificial intelligence, machine learning, augmented reality and virtual reality.

The agreement between Animoca and HTC represents a strong boost for Animoca’s market recognition and future commercial opportunities given HTC’s market positioning and extensive consumer market reach.