COVID-19 boosts gaming demand as Animoca Brands concentrates strategy on blockchain

Animoca Brands is continuing to make operational progress part of its mission to introduce gamification, blockchain technology and artificial intelligence to the worlds of gaming and fitness.

Despite being delisted from the ASX in March, the gaming developer is keen to advance its blockchain-powered strategy and is also considering a fresh listing in an alternative region in the foreseeable future.

Over the past two weeks, Animoca Brands has unveiled the acquisition of US-based gaming company Gamma Innovations, aimed at securing its GammaNow computing engine, a desktop application that harnesses idle processing power to generate Gamma Points, which are then used to acquire in-game rewards.

The move is a timely addition to the company’s overarching strategy of fusing traditional gaming elements with new-age blockchain-powered tools capable of transforming how users interact with games.

Gamma recently executed a software licence and development agreement with gaming peripherals giant Razer.

As part of the deal, Gamma agreed for its GammaNow engine to be white-labelled and branded as “Razer SoftMiner” – mining software that utilises idle processing power to mine for Ethereum, with Gamma collecting 50% of the value of tokens mined.

According to Animoca Brands, the strategic rationale behind the acquisition has everything to do with the fact that Razer wields direct access to over 60 million gamers worldwide.

The current install base for Gamma’s software is around 700,000 including 692,000 installs via the RazerSoftMiner platform, plus an additional 15,000 direct downloads of the GammaNow version.

Giving candy to a baby

A key feature of Animoca Brands’ market strategy is to ally itself with, and take significant stakes in, other gaming companies.

Earlier this month, Animoca Brands finalised its three-year-old agreement with iCandy Interactive (ASX: ICI) for the sale of its mobile games portfolio for around $5 million.

Originally announced in November 2017, the finalised deal means iCandy has acquired 318 mobile casual games from Animoca Brands, through a combination of cash and shares. In total, Animoca Brands has been issued 30.2 million new shares in iCandy, thereby taking its shareholding from 7.9% to 15.5%.

According to both parties, the duo will work closely on an operational level on the acquired game portfolio and to explore “other collaboration opportunities” in the future.

The next generation of gaming

According to Animoca Brands, one of its primary objectives is to deliver digital property rights to as many as 2.5 billion gamers while creating a new asset class.

In parallel, the company is focusing on tailoring blockchain for gaming and encouraging cryptocurrency adoption.

Blockchain has significant benefits for gamers including lower transaction costs, greater personalisation and the ability to trade virtual items. The end result is games become more immersive, collaborative and competitive, which tends to bode well for long-term sales.

The added set of capabilities, combined with broader benefits related to financial independence, has pushed blockchain into the spotlight for game developers, which means richer functionality in the years to come.

In 2019, Animoca Brands generated $25 million in customer cash receipts and partnered with some of the most respected brands and game developers in the world including Formula 1, MotoGP, Atari, iCandy, Square Enix, Momo Wang and Dapper Labs.

Its series of collaborations and partnerships have helped to increase the number of active monthly users to over 10 million while generating more than $7 million from the sale of various non-fungible tokens and collectables, to be used in-game.

Cash receipts for last year were almost $25 million, compared to $13.5 million the year before, representing an annual growth rate of 84%.

The growing popularity of digital ownership aligned with the growing adoption of blockchain technology has created an ideal environment for game developers seeking to leverage cryptocurrencies, with Animoca Brands keen to be one of the first companies to take advantage of this comparatively unsaturated market.

Underpinning Animoca Brands’ overarching strategy is the fact that gaming, as an industry, continues to grow and now hauls in as much revenue as comparable entertainment alternatives such as television, movies, music, and books.

According to market research from Statista, around 2.5 billion people can be classified as “gamers” worldwide with 66% of the US population considered to be a gamer.

Gaming has traditionally been a domain for youngsters, but over the past 20 years, the industry has transformed itself into a mainstream behemoth with a larger market than video and music combined.

The gaming industry is one of the fastest-growing with even the COVID-19 pandemic failing to halt its progress. Research published by DataReportal in April revealed 35% of participants in their study spent more time playing computer or video games since being forced into lockdown conditions.

In other research published by SteamDB, it was revealed that one of the world’s major gaming platforms, Steam, had expanded its user base by 23.7% in March to reach 24.5 million in April – an all-time record.