Animoca Brands looks to extend AI coverage in Japan via newly-acquired Zeroth

Animoca Brands ASX AB1 AI coverage Japan Zeroth Deepcore
DEEPCORE is a wholly owned subsidiary of global technology conglomerate, SoftBank Group Corp. SoftBank is the 39th largest public company in the world and the fourth largest in Japan.

Games developer Animoca Brands (ASX: AB1) is pushing forward with its move into artificial intelligence (AI) gaming coverage, as well as advancing its commercial ambitions in Asia, by signing a deal with Japanese developer DEEPCORE.

The deal was done via its subsidiary Zeroth, a company it acquired in October this year.

Animoca has been increasingly busy over this past year, engaging several partnerships in a range of gaming-focused niches, in a bid to expand its gaming market portfolio.

The company leverages gamification, blockchain, and artificial intelligence technologies to develop and publish a broad portfolio of mobile products including games such as The Sandbox, Crazy Kings and Crazy Defense Heroes, as well as products based on popular intellectual properties such as Garfield, Thomas & Friends, Ever After High and Doraemon.

One of Animoca’s leading ventures is the exclusive right to distribute CryptoKitties in China, a mobile game custom-built for the blockchain landscape, specifically for China, Hong Kong and Taiwan.

The game was first released in China in March this year, as a beta version iOS app for 5,000 players.

Japanese gaming

As part of the newly-formed partnership, Zeroth and DEEPCORE have agreed to collaborate to share deal flow, expertise and information for technology investments in Asian markets.

First and foremost, the collaboration is expected to back the growth of the AI founder community over the next few years and is expected to be focused on the Japanese market – one of the most gaming focused countries in the world that is home to historic gaming giants such as Nintendo, Sega and Sony PlayStation.

According to Animoca, Zeroth is one of the world’s first “accelerators” that focuses on artificial intelligence and machine learning.

The company specialises in investing in high-potential start-ups and subsequently provides operational, strategic, and networking support to the companies it invests in to facilitate better development of their respective business model and day-to-day operations.

Zeroth is also keen to develop a portfolio of blockchain-focused investments – an industry niche that Animoca wants to expand its exposure to, given the strong growth of blockchain-related apps in recent months.

So far, blockchain technology has been used to further cryptocurrencies and various logistical applications including shipping, logistics and administrative functions but gaming could also benefit from its inherent features that could make games more engaging and socially inclusive.

To date, Zeroth has accelerated three cohorts totalling 33 companies, obtaining an average 6% stake index in each, and has made eight investments in companies focused on blockchain technology.

“We regard this partnership with Zeroth as an important step to expand the boundary of our capability. Zeroth’s international perspective will provide us with a significant advantage to inspire entrepreneurs in Japan to address globally momentous issues with the power of AI,” said Katsumasa Niki, CEO of DEEPCORE.

One of the avenues that will be explored is DEEPCORE’s AI-focused incubation community “KERNEL HONGO”, created specifically for AI engineers and researchers in Tokyo, and a VC fund called “DEEPCORE TOKYO I Investment”, a limited partnership which invests in seed and early-stage AI start-ups.

Personnel addition

Also announced today was Zeroth’s welcoming of Paul Pheby as a new partner, a step considered to be significant in raising the deal’s chances of advancing its traction within Asia given Mr Pheby’s previous experience and industry expertise.

Mr Pheby previously worked in London, Japan and Asia with various investment banks including Citibank, Salomon Brothers and Peregrine, and is well-known in the region for establishing the first foreign joint venture investment bank and asset management company in Korea – another huge gaming market that is growing on the back of expanded internet and mobile phone adoption.

“We are humbled to work with DEEPCORE, with whom we share a vision of the future of AI, its impact on technology businesses, and its opportunity to solve humanity’s great problems. Together we will work closely to realise that vision, and support AI founders across the world and specifically in Japan,” said Tak Lo, CEO of Zeroth.

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