The company, which went public earlier this year, has lessons for other internet outfits aiming to attract younger users even as its own audience gets older.
The speed at which gaming has proliferated is matched only by the pace of new buzzwords inundating the ecosystem. Marketers and decision makers, already suffering from FOMO about opportunities within gaming, have latched onto buzzy trends like the applications of blockchain in gaming and the “metaverse” in an effort to get ahead of the trend rather than constantly play catch-up.
The allure is obvious, as the relationship between the blockchain, metaverse, and gaming makes sense. Gaming has always been on the forefront of digital ownership (one can credit gaming platform Steam for normalizing the concept for games, and arguably other media such as movies), and most agreed upon visions of the metaverse rely upon virtual environments common in games with decentralized digital ownership.
Whatever your opinion of either, I believe they both have an interrelated future in gaming. However, the success or relevance of either of these buzzy topics is dependent upon a crucial step that is being skipped at this point.
Let’s start with the example of blockchain and, more specifically, NFTs. Collecting items of varying rarities and often random distribution form some of the core “loops” in many games (i.e. kill monster, get better weapon, kill tougher monster, get even better weapon, etc.), and collecting “skins” (e.g. different outfits/permutation of game character) is one of the most embraced paradigms of micro-transactions in games.
The way NFTs are currently being discussed in relation to gaming are very much in danger of falling into this very trap: Killing the core gameplay loop via a financial fast track.
Now, NFTs are positioned to be a natural fit with various rare items having permanent, trackable, and open value. Recent releases such as “Loot (for Adventurers)” have introduced a novel approach wherein the NFTs are simply descriptions of fantasy-inspired gear and offered in a way that other creators can use them as tools to build worlds around. It’s not hard to imagine a game built around NFT items, à la Loot.
But that’s been done before… kind of. Developers of games with a “loot loop” like the one described above have long had a problem with “farmers”, who acquire game currencies and items to sell to players for real money, against the terms of service of the game. The solution was to implement in-game “auction houses” where players could instead use real money to purchase items from one another.
Unfortunately, this had an unwanted side-effect. As noted by renowned game psychologist Jamie Madigan, our brains are evolved to pay special attention to rewards that are both unexpected and beneficial. When much of the joy in some games comes from an unexpected or randomized reward, being able to easily acquire a known reward with real money robbed the game of what made it fun.
The way NFTs are currently being discussed in relation to gaming are very much in danger of falling into this very trap: Killing the core gameplay loop via a financial fast track. The most extreme examples of this phenomena commit the biggest cardinal sin in gaming — a game that is “pay to win,” where a player with a big bankroll can acquire a material advantage in a competitive game.
Blockchain games such as Axie Infinity have rapidly increased enthusiasm around the concept of “play to earn,” where players can potentially earn money by selling tokenized resources or characters earned within a blockchain game environment. If this sounds like a scenario that can come dangerously close to “pay to win,” that’s because it is.
What is less clear is whether it matters in this context. Does anyone care enough about the core game itself rather than the potential market value of NFTs or earning potential through playing? More fundamentally, if real-world earnings are the point, is it truly a game or just a gamified micro-economy, where “farming” as described above is not an illicit activity, but rather the core game mechanic?
The technology culture around blockchain has elevated solving for very hard problems that very few people care about. The solution (like many problems in tech) involves reevaluation from a more humanist approach. In the case of gaming, there are some fundamental gameplay and game psychology issues to be tackled before these technologies can gain mainstream traction.
We can turn to the metaverse for a related example. Even if you aren’t particularly interested in gaming, you’ve almost certainly heard of the concept after Mark Zuckerberg staked the future of Facebook upon it. For all the excitement, the fundamental issue is that it simply doesn’t exist, and the closest analogs are massive digital game spaces (such as Fortnite) or sandboxes (such as Roblox). Yet, many brands and marketers who haven’t really done the work to understand gaming are trying to fast-track to an opportunity that isn’t likely to materialize for a long time.
Gaming can be seen as the training wheels for the metaverse — the ways we communicate within, navigate, and think about virtual spaces are all based upon mechanics and systems with foundations in gaming. I’d go so far as to predict the first adopters of any “metaverse” will indeed be gamers who have honed these skills and find themselves comfortable within virtual environments.
By now, you might be seeing a pattern: We’re far more interested in the “future” applications of gaming without having much of a perspective on the “now” of gaming. Game scholarship has proliferated since the early aughts due to a recognition of how games were influencing thought in fields ranging from sociology to medicine, and yet the business world hasn’t paid it much attention until recently.
The result is that marketers and decision makers are doing what they do best (chasing the next big thing) without the usual history of why said thing should be big, or what to do with it when they get there. The growth of gaming has yielded an immense opportunity, but the sophistication of the conversations around these possibilities remains stunted, due in part to our misdirected attention.
There is no “pay to win” fast track out of this blind spot. We have to put in the work to win.
Hello and welcome back to TechCrunch’s China roundup, a digest of recent events shaping the Chinese tech landscape and what they mean to people in the rest of the world.
The enforcement of China’s new gaming regulations is unfolding like a cat-and-mouse game, with the country’s internet giants and young players constantly trying to outsmart each other. Following Didi’s app ban, smaller ride-hailing apps are availing themselves of the potential market vacuum.
Tencent and young gamers
The Chinese saying “Where there is a policy, there is a countermeasure” nicely encapsulates what is happening in the country’s tightening regulatory environment for video games. This month, China enacted the strictest rules to date on playtime among underage users. Players under the age of 18 were startled, scrambling to find methods to overcome the three-hour-per-week quota.
Within days, gaming behemoth Tencent has acted to root out these workarounds. It sued or issued statements to over 20 online services selling or trading adult accounts to underage players, the company’s gaming department said in a notice on Weibo this week.
Children were renting these accounts to play games for two hours at a few dollars without having to go through the usual age verification checks. Such services “are a serious threat to the real-name gaming system and underage protection mechanism,” Tencent said, calling for an end to these practices.
China has mainly been targeting games that are addiction-inducing or deemed “physically and mentally harmful” to minors. But what about games that are “good” for kids?
When Tencent and Roblox set up a joint venture in China in 2019, the speculation was that the creator-focused gaming platform would give Tencent a leg up in making educational games to inspire creativity or something that would help it align better with Beijing’s call for using tech to do more social good. As we wrote earlier:
Roblox’s marketing focus on encouraging “creativity” could sit well with Beijing’s call for tech companies to “do good,” an order Tencent has answered. Roblox’s Chinese website suggests it’s touting part of its business as a learning and STEM tool and shows it’s seeking collaborations with local schools and educators.
If Roblox can inspire young Chinese to design globally popular games, the Chinese authorities may start regarding it as a conduit for exporting Chinese culture and soft power. The gaming industry is well aware that aligning with Beijing’s interests is necessary for gaining support from the top. Indeed, a member of the Chinese People’s Political Consultative Conference, an organ for non-political spheres like the business community to “put forward proposals on major political and social issues,” said in June that video games are “an effective channel for China’s cultural exports.”
The case of Roblox will be interesting to watch for reading Beijing’s evolving attitude toward games for educational and export purposes.
Didi has had many rivals over the years, but none has managed to threaten its dominance in China’s ride-hailing industry. But recently, some of its rivals are seeing a new opportunity after regulators banned new downloads of Didi’s app, citing cybersecurity concerns. Cao Cao Mobility appears to be one.
Cao Cao, a premium ride-hailing service under Chinese automaker Geely, announced this week a $589 million Series B raise. The round should give Cao Cao ammunition for subsidizing drivers and passengers. But amid the government’s spade of anti-competition crackdowns, internet platforms these days are probably less aggressive than Didi in its capital-infused growth phase around 2015.
The app ban seems to have had a limited effect on Didi so far. The app even saw a 13% increase in orders in July, according to the Ministry of Transport. While people who get new phones will not be able to download Didi, they still are able to access its mini app run on WeChat, which is ubiquitous in China and has a sprawling ecosystem of third-party apps. It’s unclear how many active users Didi has lost, but its rivals will no doubt have to shell out great incentives to lure the giant’s drivers and customers away.
DTC fast fashion
Venture capitalists are pouring money into China’s direct-to-consumer brands in the hope that the country’s supply chain advantage coupled with its pool of savvy marketers will win over Western consumers. July saw PatPat, a baby clothing brand, raise a sizable $510 million raise. This month, news came that up-and-coming DTC brand Cider, which makes Gen Z fast fashion in China and sells them in the U.S., has secured a $130 million Series B round at a valuation of over $1 billion. The news was first reported by Chinese tech news site 36Kr and we’ve independently confirmed it.
DST Global led Cider’s new round, with participation also from the startup’s existing A16Z, an existing investor and Greenoaks Capital. Investors are clearly encouraged by Shein’s momentum around the world — its new download volume has surpassed that of Amazon in dozens of countries and is often compared side by side with industry behemoth Zara. Unlike a pure internet firm, export-oriented e-commerce has a notoriously long and complex value chain, from design, production, marketing and shipment to after-sales service. Shein’s story might have inspired many followers, but it won’t be easily replicated.
Houseparty, the social video chat app acquired by Fortnite maker Epic Games for a reported $35 million back in 2019, is shutting down. The company says Houseparty will be discontinued in October when the app will stop functioning for its existing users; it will be pulled from the app stores today, however. Related to this move, Epic Games’ “Fortnite Mode” feature, which leveraged Houseparty to bring video chat to Fortnite gamers, will also be discontinued.
Founded in 2015, Houseparty offered a way for users to participate in group video chats with friends and even play games, like Uno, trivia, Heads Up and others. Last year, Epic Games integrated Houseparty with Fortnite, initially to allow gamers to see live feeds from friends while gaming, then later adding support to livestream gameplay directly into Houseparty. At the time, these integrations appeared to be the end goal that explained why Epic Games had bought the social startup in the first place.
Now, just over two years after the acquisition was announced, and less than half a year since support for livestreaming was added to the app, Houseparty is shutting down.
The company didn’t offer any solid insight into what, at first glance, feels like an admission of failure to capitalize on its acquisition. But the reality is that Epic Games may have something larger in store beyond just video chat. That said, all Epic Games would say today is that the Houseparty team could no longer give the app the attention it required — a statement that indicates an executive decision to shift the team’s focus to other matters.
While none of the Houseparty team members are being let go as a result of this move, we’re told, they will be joining other teams where they will work on new ways to allow for “social interactions” across the Epic Games family of products. The company’s announcement hinted that those social features would be designed and built at the “metaverse scale.”
The “metaverse” is an increasingly used buzzword that references a shared virtual environment, like those provided by large-scale online gaming platforms such as Fortnite, Roblox and others. Facebook, too, claims the metaverse is the next big gambit for social networking, with CEO Mark Zuckerberg having described it as an “embodied internet that you’re inside of rather than just looking at.”
To some extent, Fortnite has begun to embrace the metaverse by offering non-gaming experiences like online concerts you attend as your avatar, and other live events. Ahead of its shutdown, Houseparty also toyed with live events that users would co-watch and participate in alongside their friends.
An Epic Games spokesperson tells TechCrunch the Houseparty team has worked on (and continues to work on) a number of other projects that focus on social. But some of the “multiple, larger projects” Epic Games has in the works remain undisclosed, we’re told.
In terms of social products, Houseparty’s technology now underpins all of Fortnite voice chat and the features they built are widely available for free to developers through Epic Games Services. They also worked on building out new social experiences, which have ranged from the social RSVP functions for Fortnite’s global events, like the recent Ariana Grande concert, to the upcoming “Operation: Sky Fire” event for collaborating quests and other game mechanics. More social functionality and new experiences are also being built into Fortnite’s user-generated content platform, Create Mode.
While it may seem odd to close an app that only last year experienced a boost in usage due to the pandemic, it appears the COVID bump didn’t have staying power.
At the height of lockdowns, Houseparty had reported it had gained 50 million new sign-ups in a month’s time as users looked to video apps to connect with family and friends while the world was shut down. But as the pandemic wore on, other video chat experiences gained more ground. Zoom, which had established itself as an essential tool for remote work, became a tool for hanging out with friends after-hours, as well. Facebook also started to eat Houseparty’s lunch with its debut of drop-in video chat “Rooms” last year, which offered a similar group video experience. And bored users shifted to audio-based social networking on apps like Clubhouse or Twitter Spaces.
According to data from Apptopia, Houseparty has been continually declining since the pandemic bump. To date, its app has seen a total of 111 million downloads across iOS and Android, with the majority (63 million) on iOS. The U.S. was Houseparty’s largest market, accounting for 43.4% of downloads, followed by the U.K. (9.8%), then Germany (5.6%).
Epic Games, meanwhile, said the app served “tens of millions” of users worldwide. It insists the closure wasn’t decided lightly, nor was the decision to shutter “Fortnite Mode” made due to lack of adoption.
Houseparty will alert users to the shutdown via in-app notifications ahead of its final closure in October. At that point, Fortnite Mode will also no longer be available.
A startup called Playbyte wants to become the TikTok for games. The company’s newly launched iOS app offers tools that allow users to make and share simple games on their phone, as well as a vertically scrollable, fullscreen feed where you can play the games created by others. Also like TikTok, the feed becomes more personalized over time to serve up more of the kinds of games you like to play.
While typically, game creation involves some aspect of coding, Playbyte’s games are created using simple building blocks, emoji and even images from your Camera Roll on your iPhone. The idea is to make building games just another form of self-expression, rather than some introductory, educational experience that’s trying to teach users the basics of coding.
At its core, Playbyte’s game creation is powered by its lightweight 2D game engine built on web frameworks, which lets users create games that can be quickly loaded and played even on slow connections and older devices. After you play a game, you can like and comment using buttons on the right-side of the screen, which also greatly resembles the TikTok look-and-feel. Over time, Playbyte’s feed shows you more of the games you enjoyed as the app leverages its understanding of in-game imagery, tags and descriptions, and other engagement analytics to serve up more games it believes you’ll find compelling.
At launch, users have already made a variety of games using Playbyte’s tools — including simulators, tower defense games, combat challenges, obbys, murder mystery games, and more.
According to Playbyte founder and CEO Kyle Russell — previously of Skydio, Andreessen Horowitz, and (disclosure!) TechCrunch — Playbyte is meant to be a social media app, not just a games app.
“We have this model in our minds for what is required to build a new social media platform,” he says.
What Twitter did for text, Instagram did for photos and TikTok did for video was to combine a constraint with a personalized feed, Russell explains. “Typically. [they started] with a focus on making these experiences really brief…So a short, constrained format and dedicated tools that set you up for success to work within that constrained format,” he adds.
Similarly, Playbyte games have their own set of limitations. In addition to their simplistic nature, the games are limited to five scenes. Thanks to this constraint, a format has emerged where people are making games that have an intro screen where you hit “play,” a story intro, a challenging gameplay section, and then a story outro.
In addition to its easy-to-use game building tools, Playbyte also allows game assets to be reused by other game creators. That means if someone who has more expertise makes a game asset using custom logic or which pieced together multiple components, the rest of the user base can benefit from that work.
“Basically, we want to make it really easy for people who aren’t as ambitious to still feel like productive, creative game makers,” says Russell. “The key to that is going to be if you have an idea — like an image of a game in your mind — you should be able to very quickly search for new assets or piece together other ones you’ve previously saved. And then just drop them in and mix-and-match — almost like Legos — and construct something that’s 90% of what you imagined, without any further configuration on your part,” he says.
In time, Playbyte plans to monetize its feed with brand advertising, perhaps by allowing creators to drop sponsored assets into their games, for instance. It also wants to establish some sort of patronage model at a later point. This could involve either subscriptions or even NFTs of the games, but this would be further down the road.
The startup had originally began as a web app in 2019, but at the end of last year, the team scrapped that plan and rewrote everything as a native iOS app with its own game engine. That app launched on the App Store this week, after previously maxing out TestFlight’s cap of 10,000 users.
Currently, it’s finding traction with younger teenagers who are active on TikTok and other collaborative games, like Roblox, Minecraft, or Fortnite.
“These are young people who feel inspired to build their own games but have been intimidated by the need to learn to code or use other advanced tools, or who simply don’t have a computer at home that would let them access those tools,” notes Russell.
Playbyte is backed by $4 million in pre-seed and seed funding from investors including FirstMark (Rick Heitzmann), Ludlow Ventures (Jonathon Triest and Blake Robbins), Dream Machine (former Editor-in-Chief at TechCrunch, Alexia Bonatsos), and angels such as Fred Ehrsam, co-founder of Coinbase; Nate Mitchell, co-founder of Oculus; Ashita Achuthan, previously of Twitter; and others.
The app is a free download on the App Store.
Netflix today announced it will begin testing mobile games inside its Android app for its members in Poland. At launch, paying subscribers will be able to try out two games, “Stranger Things: 1984” and “Stranger Things 3” — titles that have been previously available on the Apple App Store, Google Play and, in the case of the newer release, on other platforms including desktop and consoles. While the games are offered to subscribers from within the Netflix mobile app’s center tab, users will still be directed to the Google Play Store to install the game on their devices.
To then play, members will need to confirm their Netflix credentials.
Members can later return to the game at any time by clicking “Play” on the game’s page from inside the Netflix app or by launching it directly from their mobile device.
“It’s still very, very early days and we will be working hard to deliver the best possible experience in the months ahead with our no ads, no in-app purchases approach to gaming,” a Netflix spokesperson said about the launch.
The company has been expanding its investment in gaming for years, seeing the potential for a broader entertainment universe that ties in to its most popular shows. At the E3 gaming conference back in 2019, Netflix detailed a series of gaming integrations across popular platforms like Roblox and Fortnite and its plans to bring new “Stranger Things” games to the market.
On mobile, Netflix has been working with the Allen, Texas-based game studio BonusXP, whose first game for Netflix, “Stranger Things: The Game,” has now been renamed “Stranger Things: 1984” to better differentiate it from others. While that game takes place after season 1 and before season 2, in the “Stranger Things” timeline, the follow-up title, “Stranger Things 3,” is a playable version of the third season of the Netflix series. (So watch out for spoilers!)
With the launch of the test in Poland, Netflix says users will need to have a membership to download the titles as they’re now exclusively available to subscribers. However, existing users who already downloaded the game from Google Play in the past will not be impacted. They will be able to play the game as usual or even re-download it from their account library if they used to have it installed. But new players will only be able to get the game from the Netflix app.
The test aims to better understand how mobile gaming will resonate with Netflix members and determine what other improvements Netflix may need to make to the overall functionality, the company said. It chose Poland as the initial test market because it has an active mobile gaming audience, which made it seem like a good fit for this early feedback.
Netflix couldn’t say when it would broaden this test to other countries, beyond “the coming months.”
The streamer recently announced during its second-quarter earnings that it would add mobile games to its offerings, noting that it viewing gaming as “another new content category” for its business, similar to its “expansion into original films, animation and unscripted TV.”
The news followed what had been a sharp slowdown in new customers after the pandemic-fueled boost to streaming. In North America, Netflix in Q2 lost a sizable 430,000 subscribers — its third-ever quarterly decline in a decade. It also issued weaker guidance for the upcoming quarter, forecasting the addition of 3.5 million subscribers when analysts had been looking for 5.9 million. But Netflix downplayed the threat of competition on its slowing growth, instead blaming a lighter content slate, in part due to Covid-related production delays.
With the promise of an interconnected virtual world coming into focus and user-crafted gaming content exploding, Infinite Canvas is looking to apply lessons learned in the esports boom to the metaverse.
“Metaverse” is the hot buzzword right now, but it’s not an empty term. Ten different people would probably define the metaverse in ten different ways, but it’s generally used as shorthand for the web of emerging virtual spaces full of personalized avatars, games and digital goods that are already shaping our world.
Much like the realm of esports boasts individual standout players who command their own followings, the social gaming world has its own stars who make original in-game content. But right now, creators making hit content in Fortnite, Roblox and Minecraft are mostly operating on their own, without the supportive infrastructure that quickly professionalized the esports world. And like the early waves of esports players, those content creators skew young and lack some of the resources that would make it smoother to scale the digital brands they’re building.
Founded by Tal Shachar and Sebastian Park, Infinite Canvas is looking to connect creators who craft content for the world’s most popular online games with the financial resources, tools and experience they need to grow their businesses beyond what would be possible in isolation.
Shachar, the former growth strategist at Buzzfeed Studio and Chief Digital Officer at Immortals Gaming Club, and Park, previously VP of Esports for the Houston Rockets where he founded League of Legends franchise team Clutch Gaming, envision a hybrid talent management company and game publisher modeled after the success they’ve seen in the esports world. The pair liken the new venture to “an esports team for the metaverse.”
To grow their vision, Infinite Canvas has raised $2.8 million in pre-seed funds led by Lightshed Venture Partners, the venture firm founded by media analyst Richard Greenfield. BITKRAFT Ventures, Day One Ventures, Crossbeam, and Emerson Collective also participated in the funding round.
“We are just at the beginning of seeing what the metaverse market opportunity can be,” said Greenfield. “While the path to monetization is clear on platforms like YouTube, in virtual worlds Infinite Canvas is pioneering a network that will unite creators, players, and content partners to enhance the earning power of the talent building new virtual empires.”
Out of the gate, Infinite Canvas has partnered with some big names in Roblox, including Russoplays, Deeterplays, Sabrina and DJ Monopoli from Terabrite Games as well as a handful of other Roblox developers, Fortnite map makers and streamers who combined reach more than 4.5 million subscribers.
For the team, this nascent era of user-generated gaming content looks a lot like another now-ubiquitous creator platform once did.
“Roblox in particular, but really all of these UGC gaming platforms really reminded me a lot of YouTube. Which is to say that they were enabling a new type of person to distribute a content format that was previously kind of locked right behind like barriers of distribution and also of skills set and capital, quite frankly,” Shachar told TechCrunch.
After getting curious, Shachar and Park dove into the creator community and found a diverse array of generally self-taught young people from all around the world crafting custom in-game content for Fortnite, Roblox and Minecraft. Much of that content, whether intentionally or not, offered players more digital spaces to connect during the pandemic-imposed social isolation, which saw interest in online social spaces take off.
“Everyone was pretty negative about the world writ large and we’re just talking to these like 17, 16, 18 19 year old guys, gals and non-binary pals from all over the world just like straight up making cool stuff,” Park said.
In those conversations, Park and Shachar realized that while the world of user-generated gaming content can produce huge hits, creators were mostly isolated from support that could help them take their work to the next level.
“It felt very siloed — you have people making content over here on the right and then people developing these games on the left and then players kind of in the center there and that didn’t really make a ton of sense to us,” Shachar said. “Especially because it was super clear that there was this really strong loop of content creation leading to gameplay leading to content creation.”
With Infinite Canvas, they want to provide that missing framework, offering creators crafting content in virtual worlds everything from marketing support to capital and tech tools. As creator monetization channels within virtual worlds mature, Infinite Canvas hopes to even be able to broker ad and brand opportunities and empower creators to expand their own brands across platforms.
“What if we built a new kind of organization that blended parts of being a game publisher, parts of being an esports team, parts of being a capital and tech backend to basically enable these people to do what they do but better and bigger?” Shachar asked.
“For the metaverse — whatever word you want to use — to really exist, it’s going to take all of these independent people to actually populate it and bring it to life and make all of these experiences and there’s just an insane amount of talent out there that we think can be unlocked.”
Welcome back to This Week in Apps, the weekly TechCrunch series that recaps the latest in mobile OS news, mobile applications and the overall app economy.
The app industry continues to grow, with a record 218 billion downloads and $143 billion in global consumer spend in 2020. Consumers last year also spent 3.5 trillion minutes using apps on Android devices alone. And in the U.S., app usage surged ahead of the time spent watching live TV. Currently, the average American watches 3.7 hours of live TV per day, but now spends four hours per day on their mobile devices.
Apps aren’t just a way to pass idle hours — they’re also a big business. In 2019, mobile-first companies had a combined $544 billion valuation, 6.5x higher than those without a mobile focus. In 2020, investors poured $73 billion in capital into mobile companies — a figure that’s up 27% year-over-year.
This Week in Apps offers a way to keep up with this fast-moving industry in one place with the latest from the world of apps, including news, updates, startup fundings, mergers and acquisitions, and suggestions about new apps and games to try, too.
Do you want This Week in Apps in your inbox every Saturday? Sign up here: techcrunch.com/newsletters
OnlyFans to ban sexually explicit content
Creator platform OnlyFans is getting out of the porn business. The company announced this week it will begin to prohibit any “sexually explicit” content starting on October 1, 2021 — a decision it claimed would ensure the long-term sustainability of the platform. The news angered a number of impacted creators who weren’t notified ahead of time and who’ve come to rely on OnlyFans as their main source of income.
However, word is that OnlyFans was struggling to find outside investors, despite its sizable user base, due to the adult content it hosts. Some VC firms are prohibited from investing in adult content businesses, while others may be concerned over other matters — like how NSFW content could have limited interest from advertisers and brand partners. They may have also worried about OnlyFans’ ability to successfully restrict minors from using the app, in light of what appears to be soon-to-come increased regulations for online businesses. Plus, porn companies face a number of other issues, too. They have to continually ensure they’re not hosting illegal content like child sex abuse material, revenge porn or content from sex trafficking victims — the latter which has led to lawsuits at other large porn companies.
The news followed a big marketing push for OnlyFans’ porn-free (SFW) app, OFTV, which circulated alongside reports that the company was looking to raise funds at a $1 billion+ valuation. OnlyFans may not have technically needed the funding to operate its current business — it handled more than $2 billion in sales in 2020 and keeps 20%. Rather, the company may have seen there’s more opportunity to cater to the “SFW” creator community, now that it has big names like Bella Thorne, Cardi B, Tyga, Tyler Posey, Blac Chyna, Bhad Bhabie and others on board.
U.S. lawmakers demand info on TikTok’s plans for biometric data collection
Earlier this month, Senators Amy Klobuchar (D-MN) and John Thune (R-SD) sent a letter to TikTok CEO Shou Zi Chew, which said they were “alarmed” by the change, and demanded to know what information TikTok will be collecting and what it plans to do with the data. This wouldn’t be the first time TikTok got in trouble for excessive data collection. Earlier this year, the company paid out $92 million to settle a class-action lawsuit that claimed TikTok had unlawfully collected users’ biometric data and shared it with third parties.
- Apple told developers that some of the features it announced as coming in iOS 15 won’t be available at launch. This includes one of the highlights of the new OS, SharePlay, a feature that lets people share music, videos and their screen over FaceTime calls. Other features that will come in later releases include Wallet’s support for ID cards, the App Privacy report and others that have yet to make it to beta releases.
- Apple walked back its controversial Safari changes with the iOS 15 beta 6 update. Apple’s original redesign had shown the address bar at the bottom of the screen, floating atop the page’s content. Now the tab bar will appear below the page’s content, offering access to its usual set of buttons as when it was at the top. Users can also turn off the bottom tab bar now and revert to the old, Single Tab option that puts the address bar back at the top as before.
- In response to criticism over its new CSAM detection technology, Apple said the version of NeuralHash that was reverse-engineered by a developer, Asuhariet Ygvar, was a generic version, and not the complete version that will roll out later this year.
- The Verge dug through over 800 documents from the Apple-Epic trial to find the best emails, which included dirt on a number of other companies like Netflix, Hulu, Sony, Google, Nintendo, Valve, Microsoft, Amazon and more. These offered details on things like Netflix’s secret arrangement to pay only 15% of revenue, how Microsoft also quietly offers a way for some companies to bypass its full cut, how Apple initially saw the Amazon Appstore as a threat and more.
- A beta version of the Android Accessibility Suite app (12.0.0) which rolled out with the fourth Android beta release added something called “Camera Switches” to Switch Access, a toolset that lets you interact with your device without using the touchscreen. Camera Switches allows users to navigate their phone and use its features by making face gestures, like a smile, open mouth, raised eyebrows and more.
- Google announced its Pixel 5a with 5G, the latest A-series Pixel phone, will arrive on August 27, offering IP67 water resistance, long-lasting Adaptive Battery, Pixel’s dual-camera system and more, for $449. The phone makes Google’s default Android experience available at a lower price point than the soon to arrive Pixel 6.
- An unredacted complaint from the Apple-Epic trial revealed that Google had quietly paid developers hundreds of millions of dollars via a program known as “Project Hug,” (later “Apps and Games Velocity Program”) to keep their games on the Play Store. Epic alleges Google launched the program to keep developers from following its lead by moving their games outside the store.
- Snap on Thursday announced it hired its first VP of Platform Partnerships to lead AR, Konstantinos Papamiltiadis (“KP”). The new exec will lead Snap’s efforts to onboard partners, including individual AR creators building via Lens Studio as well as large companies that incorporate Snapchat’s camera and AR technology (Camera Kit) into their apps. KP will join in September, and report to Ben Schwerin, SVP of Content and Partnerships.
- Crypto exchange Coinbase will enter the Japanese market through a new partnership with Japanese financial giant Mitsubishi UFJ Financial Group (MUFG). The company said it plans to launch other localized versions of its existing global services in the future.
- Facebook launched a “test” of Facebook Reels in the U.S. on iOS and Android. The new feature brings the Reels experience to Facebook, allowing users to create and share short-form video content directly within the News Feed or within Facebook Groups. Instagram Reels creators can also now opt in to have their Reels featured on users’ News Feed. The company is heavily investing its its battle with TikTok, even pledging that some portion of its $1 billion creator fund will go toward Facebook Reels.
- Twitter’s redesign of its website and app was met with a lot of backlash from users and accessibility experts alike. The company choices add more visual contrast between various elements and may have helped those with low vision. But for others, the contrast is causing strain and headaches. Experts believe accessibility isn’t a one-size fits all situation, and Twitter should have introduced tools that allowed people to adjust their settings to their own needs.
- Twitter also tapped crypto developer Jay Graber to head the company’s “bluesky” project, which aims to create a decentralized social media protocol on which a number of networks, including Twitter, will eventually operate. The project will operate independently from Twitter, but is funded by Twitter and run by Twitter employees. Elsewhere, Twitter rolled out a new option that would allow users to report misinformation.
- Twitter added Spaces support to its API, allowing developers to build Spaces discovery tools, and later, tools for hosts.
- YikYak returned, under new management. The once-popular anonymous social network relaunched on iOS this week under new anonymous ownership from people who clearly hope a do-over will lead to different results. The original version of the app shut down in 2017 after being plagued by cyberbullying.
- The pro-Trump Twitter alternative Gettr’s lack of moderation has allowed users to share child exploitation images, according to research from the Stanford Internet Observatory’s Cyber Policy Center.
- Pinterest rolled out a new set of more inclusive search filters that allow people to find styles for different types of hair textures — like coily, curly, wavy, straight, as well as shaved or bald and protective styles.
- Photoshop for iPad gained new image correction tools, including the Healing Brush and Magic Wand, and added support for connecting an iPad to external monitors via HDMI or USB-C. The company also launched a Photoshop Beta program on the desktop.
- WhatsApp is being adopted by the Taliban to spread its message across Afghanistan, despite being on Facebook’s list of banned organizations. The company says it’s proactively removing Taliban content — but that may be difficult to do since WhatsApp’s E2E encryption means it can’t read people’s texts. This week, Facebook shut down a Taliban helpline in Kabul, which allowed civilians to report violence and looting, but some critics said this wasn’t actually helping local Afghans, as the group was now in effect governing the region.
- WhatsApp is also testing a new feature that will show a large preview when sharing links, which some suspect may launch around the time when the app adds the ability to have the same account running on multiple devices.
Streaming & Entertainment
- Netflix announced it’s adding spatial audio support on iPhone and iPad on iOS 14, joining other streamers like HBO Max, Disney+ and Peacock that have already pledged to support the new technology. The feature will be available to toggle on and off in the Control Center, when it arrives.
- Blockchain-powered streaming music service Audius partnered with TikTok to allow artists to upload their songs using TikTok’s new SoundKit in just one click.
- YouTube’s mobile app added new functionality that allows users to browse a video’s chapters, and jump into the chapter they want directly from the search page.
- Spotify’s Anchor app now allows users in global markets to record “Music + Talk” podcasts, where users can combine spoken word recordings with any track from Spotify’s library of 70 million songs for a radio DJ-like experience.
- Podcasters are complaining that Apple’s revamped Podcasts platform is not working well, reports The Verge. Podcasts Connect has been buggy, and sports a confusing interface that has led to serious user errors (like entire shows being archived). And listeners have complained about syncing problems and podcasts they already heard flooding their libraries.
- Tinder announced a new feature that will allow users to voluntarily verify their identity on the platform, which will allow the company to cross-reference sex offender registry data. Previously, Tinder would only check this database when a user signed up for a paid subscription with a credit card.
- Pokémon Unite will come to iOS and Android on September 22, The Pokémon Company announced during a livestream this week. The strategic battle game first launched on Nintendo Switch in late July.
- Developer Konami announced a new game, Castlevania: Grimoire of Souls, which will come exclusively to Apple Arcade. The game is described as a “full-fledged side-scrolling action game,” featuring a roster of iconic characters from the classic game series. The company last year released another version of Castelvania on the App Store and Google Play.
- Dragon Ball Z: Dokkan Battle has now surpassed $3 billion in player spending since its 2015 debut, reported Sensor Tower. The game from Bandai Namco took 20 months to reach the figure after hitting the $2 billion milestone in 2019. The new landmark sees the game joining other top-grossers, including Clash Royale, Lineage M and others.
- Sensor Tower’s mobile gaming advertising report revealed data on top ad networks in the mobile gaming market, and their market share. It also found puzzle games were among the top advertisers on gaming-focused networks like Chartboost, Unity, IronSource and Vungle. On less game-focused networks, mid-core games were top titles, like Call of Duty: Mobile and Top War.
Health & Fitness
- Apple is reportedly scaling back HealthHabit, an internal app for Apple employees that allowed them to track fitness goals, talk to clinicians and coaches at AC Wellness (a doctors’ group Apple works with) and manage hypertension. According to Insider, 50 employees had been tasked to work on the project.
- Samsung launched a new product for Galaxy smartphones in partnership with healthcare nonprofit The Commons Project, that allows U.S. users to save a verifiable copy of their vaccination card in the Samsung Pay digital wallet.
- Samsung said it’s removing ads shown in its default apps, Samsung Pay, Samsung Weather and Samsung Theme, to address widespread criticism that a flagship phone’s core apps shouldn’t be ruined with ads.
Government & Policy
- China cited 43 apps, including Tencent’s WeChat and an e-reader from Alibaba, for illegally transferring user data. The regulator said the apps had transferred users location data and contact list and harassed them with pop-up windows. The apps have until August 25 to make changes before being punished.
Security & Privacy
- A VICE report reveals a fascinating story about a jailbreaking community member who had served as a double agent by spying for Apple’s security team. Andrey Shumeyko, whose online handles included JVHResearch and YRH04E, would advertise leaked apps, manuals and stolen devices on Twitter and Discord. He would then tell Apple things like which Apple employees were leaking confidential info, which reporters would talk to leakers, who sold stolen iPhone prototypes and more. Shumeyko decided to share his story because he felt Apple took advantage of him and didn’t compensate him for the work.
Funding and M&A
South Korea’s GS Retail Co. Ltd will buy Delivery Hero’s food delivery app Yogiyo in a deal valued at 800 billion won ($685 million USD). Yogiyo is the second-largest food delivery app in South Korea, with a 25% market share.
Gaming platform Roblox acquired a Discord rival, Guilded, which allows users to have text and voice conversations, organize communities around events and calendars and more. Deal terms were not disclosed. Guilded raised $10.2 million in venture funding. Roblox’s stock fell by 7% after the company reported earnings this week, after failing to meet Wall Street expectations.
Travel app Hopper raised $175 million in a Series G round of funding led by GPI Capital, valuing the business at over $3.5 billion. The company raised a similar amount just last year, but is now benefiting from renewed growth in travel following COVID-19 vaccinations and lifting restrictions.
Indian quiz app maker Zupee raised $30 million in a Series B round of funding led by Silicon Valley-based WestCap Group and Tomales Bay Capital. The round values the company at $500 million, up 5x from last year.
Danggeun Market, the publisher of South Korea’s hyperlocal community app Karrot, raised $162 million in a Series D round of funding led by DST Global. The round values the business at $2.7 billion and will be used to help the company launch its own payments platform, Karrot Pay.
Bangalore-based fintech app Smallcase raised $40 million in Series C funding round led by Faering Capital and Premji Invest, with participation from existing investors, as well as Amazon. The Robinhood-like app has over 3 million users who are transacting about $2.5 billion per year.
Social listening app Earbuds raised $3 million in Series A funding led by Ecliptic Capital. Founded by NFL star Jason Fox, the app lets anyone share their favorite playlists, livestream music like a DJ or comment on others’ music picks.
U.S. neobank app One raised $40 million in Series B funding led by Progressive Investment Company (the insurance giant’s investment arm), bringing its total raise to date to $66 million. The app offers all-in-one banking services and budgeting tools aimed at middle-income households who manage their finances on a weekly basis.
Indian travel booking app ixigo is looking to raise Rs 1,600 crore in its initial public offering, The Economic Times reported this week.
Trading app Robinhood disappointed in its first quarterly earnings as a publicly traded company, when it posted a net loss of $502 million, or $2.16 per share, larger than Wall Street forecasts. This overshadowed its beat on revenue ($565 million versus $521.8 million expected) and its more than doubling of MAUs to 21.3 million in Q2. Also of note, the company said dogecoin made up 62% of its crypto revenue in Q2.
3D scanning software maker Polycam launched a new 3D capture tool, Photo Mode, that allows iPhone and iPad users to capture professional-quality 3D models with just an iPhone. While the app’s scanner before had required the use of the lidar sensor built into newer devices like the iPhone 12 Pro and iPad Pro models, the new Photo Mode feature uses just an iPhone’s camera. The resulting 3D assets are ready to use in a variety of applications, including 3D art, gaming, AR/VR and e-commerce. Data export is available in over a dozen file formats, including .obj, .gtlf, .usdz and others. The app is a free download on the App Store, with in-app purchases available.
Jiobit, the tracking dongle acquired by family safety and communication app Life360, this week partnered with emergency response service Noonlight to offer Jiobit Protect, a premium add-on that offers Jiobit users access to an SOS Mode and Alert Button that work with the Jiobit mobile app. SOS Mode can be triggered by a child’s caregiver when they detect — through notifications from the Jiobit app — that a loved one may be in danger. They can then reach Noonlight’s dispatcher who can facilitate a call to 911 and provide the exact location of the person wearing the Jiobit device, as well as share other details, like allergies or special needs, for example.
When your app redesign goes wrong…
Prominent App Store critic Kosta Eleftheriou shut down his FlickType iOS app this week after too many frustrations with App Review. He cited rejections that incorrectly argued that his app required more access than it did — something he had successfully appealed and overturned years ago. Attempted follow-ups with Apple were ignored, he said.
Anyone have app ideas?
Roblox has become a video game titan, in recent years dominating the world of kids’ gaming and earning $454 million in revenue last quarter alone. A new report argues that success is built on exploiting young game developers, many of them children, who are making content for the game.
As a platform, Roblox provides gamers the tools to both create and play an almost unfathomable array of “experiences,” from climbing an enormous stairway to running a restaurant to escaping a prison. Tens of millions of these games live on Roblox’s browser—hundreds of times more titles than exist on Steam. Every day, 43 million people play those games, mostly kids. Some of the most popular experiences have received billions of visits and earn their developers millions annually.
Facebook’s journey toward making virtual reality a thing has been long and circuitous, but despite mixed success in finding a wide audience for VR, they have managed to build some very nice hardware along the way. What’s fairly ironic is that while Facebook has managed to succeed in finessing the hardware and operating system of its Oculus devices — things it had never done before — over the years it has struggled most with actually making a good app for VR.
The company has released a number of social VR apps over the years, and while each of them managed to do something right, none of them did anything quite well enough to stave off a shutdown. Setting aside the fact that most VR users don’t have a ton of other friends that also own VR headsets, the broadest issue plaguing these social apps was that they never really gave users a great reason to use them. While watching 360-videos or playing board games with friends were interesting gimmicks, it’s taken the company an awful lot of time to understand that a dedicated ”social” app doesn’t make much sense in VR and that users haven’t been looking for a standalone social app, so much as they’ve been looking for engaging experiences that were improved by social dynamics.
This all brings me to what Facebook showed me a demo of this week — a workplace app called Horizon Workrooms which is launching in open beta for Quest 2 users starting today.
The app seems to be geared towards providing work-from-home employees a virtual reality sphere to collaborate inside. Users can link their Mac or PC to Workrooms and livestream their desktop to the app while the Quest 2’s passthrough cameras allow users to type on their physical keyboard. Users can chat with one another as avatars and share photos and files or draw on a virtual whiteboard. It’s an app that would have made a more significant splash for the Quest 2 platform had it launched earlier in the pandemic, though it’s tackling an issue that still looms large among tech savvy offices — finding tech solutions to aid meaningful collaboration in a remote environment.
Horizon Workrooms isn’t a social app per se but the way it approaches social communication in VR is more thoughtful than any other first-party social VR app that Facebook has shipped. The spatial elements are less overt and gimmicky than most VR apps and simply add to an already great functional experience that, at times, felt more productive and engaging than a normal video call.
It all plays into CEO Mark Zuckerberg’s recent proclamation that Facebook is transitioning into becoming a “metaverse company.”
Now, what’s the metaverse? In Zuckerberg’s own words, “It’s a virtual environment where you can be present with people in digital spaces. You can kind of think of this as an embodied internet that you’re inside of rather than just looking at.” This certainly sounds like a fairly significant recalibration for Facebook, which has generally approached AR/VR as a wholly separate entity from its suite of mobile apps. Desktop users and VR users have been effectively siloed from each other over the years.
Generally, Facebook has been scaling Oculus like they’re building the next smartphone, building its headsets with a native app paradigm at their core. Meanwhile, Zuckerberg’s future-minded “metaverse” sounds much more like what Roblox has been building towards than anything Facebook has actually shipped. Horizon Workrooms is living under the Horizon brand which seems to be where Facebook’s future metaverse play is rooted. The VR social platform is interestingly still in closed beta after being announced nearly two years ago. If Facebook can ever see Horizon’s vision to fruition, it could grow to become a Roblox-like hub of user-created games, activities and groups that replaces the native app mobile dynamics with a more fluid social experience.
The polish of Workrooms is certainly a promising sign of where Facebook could be moving.
Roblox is using M&A to bulk up its social infrastructure, announcing Monday morning that they had acquired the team at Guilded which has been building a chat platform for competitive gamers.
The service competes with gaming chat giant Discord, with the team’s founders telling TechCrunch in the past that as Discord’s ambitions had grown beyond the gaming world, its core product was meeting fewer competitive gaming needs. Like Discord, users can have text and voice conversations on the Gulded platform, but Guilded also allowed users to organize communities around events and calendars, with plenty of specific functionality designed around ensuring that tournaments happened seamlessly.
The startup’s product supported hundreds of games, with specific functionality for a handful of titles including League of Legends, Fortnite, CS: GO and, yes, Roblox. Earlier this year, the company launched a bot API designed to help non-technical users build bots that could enrich their gaming communities.
Guilded had raised $10.2 million in venture capital funding to date according to Crunchbase, including a $7 million Series A led by Matrix Partners early last year. The company launched out of Y Combinator in mid-2017.
Terms of the Roblox deal weren’t disclosed. In an announcement post, Roblox detailed that the Guilded team will operate as an independent product group going forward. In a separate blog post, Guilded CEO Eli Brown wrote that existing stakeholders will be able to continue using the product as they have previously.
“Everyone – including communities, partners, and bot developers – will be able to keep using Guilded the same way you are now,” Brown wrote. “Roblox believes in our team and in our mission, and we’re going to continue to operate as an independent product in order to achieve it.”
Roblox has seen profound success and heightened investor attention in recent years as the pandemic has pushed more gamers online and brought more users into the fold, but that success has drawn the attention of competitors. In June, Facebook acquired a small Roblox competitor called Crayta, with CEO Mark Zuckerberg announcing just weeks ago that he planned to transform Facebook into a “metaverse” company, using a term many have come to associate closely with what Roblox has been building. Guilded represents an opportunity for Roblox to bring its user base deeper inside its own suite of products, creating a social infrastructure that keeps users bought in.
Facebook’s booming business is dominated by digital ads, but it also has hardware ambitions beyond VR. During the company’s latest earnings call, CEO Mark Zuckerberg said its next product release would be a pair of smart glasses from Ray-Ban.
“The glasses have their iconic form factor, and they let you do some pretty neat things,” the Facebook co-founder said. “So I’m excited to get those into people’s hands and to continue to make progress on the journey toward full augmented reality glasses in the future.”
Facebook’s sunglasses have been the subject of rumors since 2019. Back then, sources told CNBC that Facebook was working with Ray-Ban owner EssilorLuxottica on AR eyewear nicknamed “Orion.” The glasses were billed as a full-fledged phone replacement on which you could take calls, see information and even broadcast livestreams. That inevitably drew comparisons to Google Glass (another Luxottica collab) instead of the phone-tethered Spectacles from Snap. Last year, Hugo Barra, then VP VR at Facebook Reality Labs, confirmed that the glasses would land in 2021. But, we haven’t heard much since.
For Facebook, the glasses hold the key to its future. Alongside virtual reality, augmented reality (AR) is integral to building the “metaverse,” Zuckerberg said. In the future, Facebook will morph into a shared, liveable platform that lets you “teleport” between different social experiences using VR and AR, Zuckerberg explained.
The term metaverse is the latest buzzword seized upon by Silicon Valley and futurists. While the concept has been around for well over a decade, it gained traction after the breakout success of multiplayer game creation platforms like Fortnite and Roblox. Earlier this week, Microsoft chief Satya Nadella mentioned an “enterprise metaverse” on his company’s earnings call.
For Facebook, the metaverse is more than just a fad. The company is spending billions in order to build its shared universe, which will be populated with Facebook users and digital ads, according to Zuckerberg. In order for it to become a reality, the company needs more people to buy its computing hardware. Therefore, the plan is to make those devices more affordable.
“Our business model isn’t going to primarily be around trying to sell devices at a large premium or anything like that because our mission is around serving as many people as possible,” Zuckerberg noted. “So we want to make everything that we do as affordable as possible, so as many people as possible can get into it and then compounds the size of the digital economy inside it. So that’s kind of at a high level how I’m thinking about this.”
Sunglasses aren’t the only hardware Facebook is reportedly working on. Multiple reports have claimed Facebook is developing a smartwatch with a built-in cellular connection and a detachable display. Initially, it was believed that the watch would be first out the gate, but it seems Zuckerberg had other plans.
Editor’s note: This post originally appeared on Engadget.
LA-based game studio Singularity 6 has banked more funding as it scales itself up and readies for the launch of its debut title.
The startup tells TechCrunch, they’ve raised $30 million in a Series B bout of funding led by FunPlus Ventures with additional participation from Andreessen Horowitz (a16z), LVP, Transcend, Anthos Capital and Mitch Lasky. The studio has now disclosed some $49 million in funding, a sizable sum, but one that showcases how much investors are looking to rally around gaming platform plays in the wake of Roblox’s monster IPO.
In 2019, Singularity 6 raised a $16.5 million Series A led by Andreessen Horowitz. At the time, the studio was mum on details about its upcoming debut title, but we’ve learned more about it since.
The title, Palia, is a community simulation game that seems to be more focused on Animal Crossing-like community mechanics in an MMO environment, rather than endless battles. Last month, the studio showcased a launch trailer of the title which hinted at a good deal of the gameplay. Palia looks to be a medieval Zelda-like environment where users can move between towns in an open world environment while farming and collecting resources to build structures in a shared world.
The company has said in marketing materials that the title is “designed to create community, friendships and a real sense of belonging.” In a statement, a16z partner Jonathan Lai called the upcoming title, “warm and dynamic.”
There are still quite a bit of unanswered questions about the title, which is currently taking sign-ups on its website to be alerted to pre-alpha access. We do know that plenty of VCs are betting millions on the prospect that this multi-player title could be big.
The Covid-19 pandemic drove increased demand for mobile gaming, as consumers under lockdowns looked to online sources of entertainment, including games. But even as Covid-19 restrictions are easing up, the demand for mobile gaming isn’t slowing. According to a new report from mobile data and analytics provider App Annie in collaboration with IDC, users worldwide downloaded 30% more games in the first quarter of 2021 than in the fourth quarter of 2019, and spent a record-breaking $1.7 billion per week in mobile games in Q1 2021.
That figure is up 40% from pre-pandemic levels, the report noted.
The U.S. and Germany led other markets in terms of growth in mobile game spending year-over-year as of Q1 2021 in the North American and Western European markets, respectively. Saudi Arabia and Turkey led the growth in the rest of the world, outside the Asia-Pacific region. The latter made up around half of the mobile game spend in the quarter, App Annie said.
The growth in mobile gaming, in part accelerated by the pandemic, also sees mobile further outpacing other forms of digital games consumption. This year, mobile gaming will increased its global lead over PC and Mac gaming to 2.9x and will extend its lead over home games consoles to 3.1x.
However, this change comes at a time when the mobile and console market is continuing to merge, App Annie notes, as more mobile devices are capable of offering console-like graphics and gameplay experiences, including those with cross-platform capabilities and social gaming features.
Games with real-time online features tend to dominate the Top Grossing charts on the app stores, including things like player-vs-player and cross-play features. For example, the top grossing mobile game worldwide on iOS and Google Play in Q1 2021 was Roblox. This was followed by Genshin Impact, which just won an Apple Design Award during the Worldwide Developer Conference for its visual experience.
The report also analyzed the ad market around gaming and the growth of mobile companion apps for game consoles, including My Nintendo, Xbox Game Pass, PlayStation App, Steam, Nintendo Switch, and Xbox apps. Downloads for these apps peaked under lockdowns in April 2020 in the U.S., but continue to see stronger downloads than pre-pandemic.
On the advertising front, App Annie says user sentiment towards in-game mobile ads improved in Q3 2020 compared with Q3 2019, but rewarded video ads and playable ads were preferred in the U.S.
Even as NFT sales dip below their most speculative highs, startups aiming to tap into their potential are still scoring big funding rounds from investors who believe there’s much more to crypto collectibles than the past few months of hype.
Mythical Games, an NFT games startup based out of Los Angeles, has banked a $75 million raise from new and existing investors betting on the startup’s aim to expand the ambitions of their first title and locate a substantial platform opportunity amid helping developers build blockchain-based gaming experiences.
The round was led by WestCap. Existing investors were joined by 01 Advisors, Bilibili, Gary Vaynerchuk, the Glazer family, Moore Capital, and Redbird Capital in the Series B funding. The startup has raised a whopping $120 million to date.
The company has been building a title called Blankos Block Party that seems to be Fall Guys meets Roblox meets Funko Pop. The PC game capitalizes on a number of big social gaming trends around user-created content, while adding in a marketplace where users can buy avatar figures and accessories crafted by a variety of artists and designers that Mythical has partnered with. Users can buy or sell the limited run or open edition items through their marketplace. Unlike some other NFT platforms, the goods live on a private blockchain so they can’t be re-sold on public marketplace platforms like OpenSea.
Mythical Games is part of a growing movement to bring blockchain-based game mechanics mainstream while leaving behind elements of crypto platforms that are seen as less ready for primetime. Users can purchase avatars on the platform with cryptocurrency through BitPay but they can also pay with a credit card. Users don’t need to walk through the mechanics of setting up a wallet or writing down a seed phrase either.
While the company has big hopes for Blankos as it onboards more users, the bigger investor opportunity is likely in the game engine that the team is building. The startup’s “Mythical Economic Engine” is being designed to help budding game builders create NFT-based marketplaces that won’t get them in any regulatory trouble, marrying compliance across geographies and tools that help creators comply with anti-money laundering laws and know-your-customer frameworks.
“With any new market like [NFTs], it goes through all these different cycles,” Mythical Games CEO John Linden tells TechCrunch. “We think this will actually change gaming for the long haul. The more we talk to game studios, we’re finding more and more potential use cases.”
Facebook has been making plenty of one-off virtual reality studio acquisitions lately, but today the company announced that they’re buying something with wider ambitions — a Roblox-like game creation platform.
Facebook shared that they’re buying Unit 2 Games, which builds a platform called Crayta. Like some other platforms out there it builds on top of the Unreal Engine and gives users a more simple creation interface teamed with discovery and community features. Crayta has cornered its own niche pushing monetization paths like Battle Pass seasons giving the platform a more Fortnite-like vibe as well.
Unit 2 has been around for just over 3 years and Crayta launched just last July. Its audience has likely been limited by the studio’s deal to exclusively launch on Google’s cloud-streaming platform Stadia though it’s also available on the Epic Games Store as of March.
The title feels designed for the lightweight nature of cloud-gaming platforms with users able to share access to games just by linking other users and Facebook seems keen to use Crayta to push forward their own efforts in the gaming sphere.
“Crayta has maximized current cloud-streaming technology to make game creation more accessible and easy to use. We plan to integrate Crayta’s creation toolset into Facebook Gaming’s cloud platform to instantly deliver new experiences on Facebook,” Facebook Gaming VP Vivek Sharma wrote in an announcement post.
The entire team will be coming on as part of the acquisition, though financial terms of the deal weren’t shared.
If the Instagram ads feel like they’re closing in and you can’t bring yourself to toggle your Zoom camera on these days, you’re far from alone. Well into 2021, many of the social apps and virtual chat tools that kept the world connected during the pandemic feel more exhausting than the real-life interactions they’re meant to simulate.
But what if hanging out online was… not miserable?
That’s the idea behind Skittish, a virtual browser-based event platform from XOXO co-founder Andy Baio. Skittish is a playful cross between a social audio chat app like Discord or Clubhouse and a cute video game, replete with round, colorful animal avatars to choose from. Unlike a Zoom call, Skittish is a place — one where its inhabitants can bump into one another, do activities together and wait for serendipity to strike.
Skittish is a natural extension of Baio’s interests, a sort of inviting, lightly indie-gamified space where creative people can showcase their work and hang out. “I think I’m just drawn to places where people can be themselves,” Baio told TechCrunch. “With Skittish, it’s been really important to me that people can engage at the level they’re comfortable with.”
Baio has a reputation for curating social spaces, though previously they were mostly IRL. In 2012, Baio co-created XOXO, a whimsical Portland-based festival for quirky people who make stuff. While the festival took a few years off due to Covid, the event lives on in a bustling online community full of indie game devs, offbeat podcasters and digital artists. Prior to XOXO, Baio worked on Kickstarter pre-launch and went on to serve as the crowdfunding site’s first chief technology officer. (Full disclosure: I’m a former XOXO attendee who is part of the community.)
The aptly named Skittish is meant to create an online social space that doesn’t put people on the spot. In Baio’s ideal virtual world, introverts could circle the periphery while extroverts could plunge right in and hold court at the center, just like they might in real life. That range of social styles that isn’t reflected in virtual environments that are either explicitly for work or modeled after work and it’s enough to inspire dread for a lot of people.
For Baio, audio chat hits a sweet spot. Taking the camera out of the equation makes people feel socially fluid, but audio still evokes a degree of social presence that text can’t compete with.
“There’s an assumption in a lot of virtual events that people want to be on camera all the time with strangers, which feels alien to me,” Baio said. “Skittish is audio by default, and uses spatial audio so that you can hear people around you and lurk a little bit before deciding if you want to jump into a conversation. Socializing anywhere, even online, can be really anxiety-inducing.”
Clubhouse might be synonymous with social audio right now, but its structure still doesn’t appeal to everyone. “I like the casual and conversational approach to audio, but [it] just feels like a series of conference panels and needs a strong moderator to be compelling enough to tune in,” Baio said.
How Skittish works
In Skittish, walking up to a group of people (animals, really — Skittish users can differentiate themselves by choosing one of more than 75 deeply cute animal avatars) allows you to hear a conversation just like you would in real life. Backing away, you’d hear that chatter fade until eventually it wouldn’t be audible any more. To have a more private side conversation, you and a friend (a crocodile, maybe?) could peel off from a cluster of other people and deepen your chat on a virtual walk.
Inside a Skittish room, event participants can walk around, chat with others over a mic, place virtual objects and even hop through portals to other rooms. Anyone running a Skittish space can stream videos and music from YouTube or Soundcloud to a virtual screen. Event organizers can also broadcast themselves or other speakers to the full room, overriding the normal proximity rules that let you hear what’s around you.
Baio doesn’t imagine Skittish as a persistent social space, but instead wants it to provide a flexible, playful platform for all kinds of events, everything from live podcast readings and tabletop games to larger company events. Baio says the core target audience for Skittish is “anybody with a Patreon,” and larger company events will offset costs for creators who use Skittish to connect with their communities. Anyone hosting an event can choose to either populate a virtual space with pre-designed virtual objects (think pirate ships and giant doughnuts) or dream up their own environment from scratch.
By designing a service that only exists when people need it, he hopes to avoid the harassment and toxicity that abounds on big social networks. Skittish will still pack a set of tools that allow a space’s creator to mute, kick or even ban users, but ideally, it won’t need it.
“I’m a big fan of dark social, in general, where people can feel more like themselves and moderation is much more human and manageable,” Baio said.
Building Skittish and what’s next
The pandemic shed new light on what people really want out of online social spaces. Zoom’s novelty wore off quickly, and by late 2020 group video chat felt like an entrenched fixture of virtual work, not virtual play. It shouldn’t be surprising that a gentle social simulator with light multiplayer features emerged as the game of 2020.
“It’s a bit of a cliché, but Animal Crossing: New Horizons became a reliable escape for me during the pandemic, a daily source of comfort and routine when we couldn’t go outside,” Baio said. He was charmed by his first foray into the series’ famously soothing rhythms and the game helped him envision Skittish.
“… I think what inspired me most were the simplicity of the controls and camera, the overall tone of the game, and the social features, limited as they are,” Baio said. “You’re capped at seven visitors and it takes forever for people to fly in, but despite that, it’s just a joyful experience to have a bunch of people over to your island.”
With the Nintendo Switch sold out everywhere and Animal Crossing racing up the console’s all-time sales charts, it was obvious early on that something resonated. People who wouldn’t normally consider themselves gamers bought Switches and spent hours shaking virtual trees, chatting with squirrels and touring friends’ islands for interior design tips. With Skittish, Baio hopes to capture a little of that same magic.
Games that double as social networks are booming right now — and with good reason. For many people it’s more natural to socialize when you’re ambiently doing something else together, whether that’s teaming up for a Fortnite duo, building a viking longhouse in Valheim or sampling user-built games within Roblox.
Socializing online with avatars also lets you express yourself in a meaningful enough way that Epic built an entire business around it, with sales of skins (virtual outfits) and emotes (dance moves and gestures) making up the lion’s share of Fortnite revenue.
Skittish grew out of a $100,000 grant awarded by Grant For The Web, a fund created by Coil, Mozilla and Creative Commons to support projects that incorporate micropayments for online creators. Baio began prototyping Skittish last July, imagining it as a pop-up space for events rather than a persistent virtual world.
Skittish spaces initially accommodated up to 120 mixed voices in a single room, but the audio capacity is even higher now. Though he’s still testing what the new limits might be, Skittish is getting closer to Baio’s goal of hosting 1000-person events. Skittish rooms can now be password protected, invite-only or public, and Baio imagines special “cozy” 3-5 person spaces in the project’s future.
For its high quality spatial audio chat, Skittish uses an API from High Fidelity, the latest project from Second Life creator Philip Rosedale. Amazingly, Second Life added spatial audio to its online worlds all the way back in 2007 — fourteen years ago.
Skittish will host its first paid events this month as a test, with invites to follow after that. Baio plans to rely on paid events for revenue and he’s on the fence about offering a free tier due to moderation concerns and the costs associated with hosting hundreds of simultaneous conversations between virtual elephants, zebras and raccoons.
A walk in Skittish
I met up with Baio in Skittish to chat about the project and it immediately felt less awkward than a Zoom call or Google Hangout. As a noble trash panda, I followed Baio’s owl around the colorful polygonal virtual set like we might have walked around a park having coffee together.
Skittish looks like a video game and you can move around using WASD if you want, but it’s straightforward enough that anyone can get the hang of it right away. The world’s simple graphical style sets a chill, creative vibe and the avatars even have a gentle idle animation, a kind of bounce that brings your respective elephant, raccoon or zebra to life.
Like experiences I’ve had in a few other innovative avatar-based virtual worlds (AltspaceVR comes to mind), the sense of really being there, just hanging out, feels revelatory. Multiplayer games have been miles ahead of traditional social networks on this phenomenon for ages; it’s no wonder that Fortnite and Minecraft are de facto social networks for a huge swath of younger people. In Skittish, the high quality spatial audio and playful sense of presence offer something similarly transporting.
Virtual owls aside, Baio says says Skittish will be a success when people start make real connections there that follow them beyond the virtual world he’s created.
“Just like the events I’ve run in real life, I’ll know it’s working when I hear stories about people meeting each other in a playful environment and making new friends,” Baio said.
Roblox, the massively valued user-created gaming platform, has removed any mention of “games” from its user interface. It’s a seemingly small semantic change that nonetheless could have some major implications in the ongoing Epic Games v. Apple trial.
The Verge notes that what was once the “Games” tab on the Roblox website is now listed as “Discover” (though the URL still retains the old roblox.com/games/ address). Individual games are now referred to as “experiences” across the website and the mobile Roblox apps, while the word “game” seems to have been scrubbed altogether.
“The term ‘experiences’ is consistent with how we’ve evolved our terminology to reflect our realization of the metaverse,” a Roblox spokesperson told The Verge. “Roblox is an online community where people do things together in virtual worlds, and over the years, we began referring to these worlds as experiences, as they better represent the wide range of 3D immersive places—from obbys [obstacle courses] to virtual concerts—that people can enjoy together with their friends.”
As gaming platforms capitalize on pandemic-fueled traffic to their digital worlds, brands that drive culture in the physical world are fighting to ensure they don’t miss any new opportunities. A new partnership between Roblox and Gucci brings digital items from the fashion house into the platform’s metaverse alongside a new limited-run digital experience.
Guccis new experience teams a set of virtual spaces with a set of digital branded items in an effort to immerse Roblox users inside a world that feels unique to the Gucci brand and Roblox platform. The new space, called Gucci Garden, debuts today for a two-week run on the Roblox platform.
The environment takes advantage of recent advances in the game engine powering Roblox, bringing users a high-dynamic set of environments that they can traverse as blank mannequins, which evolve visually as users move through different spaces. Different rooms in the experience draw influence from different Gucci campaigns of the past several years. The digital event’s rollout accompanies a real-world multimedia event in Florence.
The rollout follows an early pilot with creator Rook Vanguard in releasing Gucci-branded digital items to the platform this past December.
In an interview with TechCrunch, Gucci CMO Robert Triefus details how the luxury fashion brand has been redefining its approachability as it extends its reach to digital platforms like Roblox — which the company sees as an opportunity that’s growing too quickly to ignore.
“Hats off to Roblox, scale came quickly,” Triefus tells TechCrunch. “Gucci is scale, though it’s taken us 100 years, and it took Roblox about 100 days.”
For high-fashion brands, the digital sphere has presented plenty of challenges when it comes to preserving exclusivity on a medium that begs for mass adoption. Triefus says Gucci has aimed to lean into the access offered by digital platforms as a way of promoting a more inclusive brand.
“There’s so much talk today about the metaverse,” Triefus says. “In the last 6 years, [Creative Director Alessandro Michele] has created a Gucci Metaverse but it’s not necessarily a digital manifestation, it’s a narrative.”
Luxury and authenticity have been some of the central sells of blockchain-based NFTs, something Triefus still sees opportunities for down the road. “It’s astonishing to me how fast the conversation around NFTs has exploded,” Triefus says. “We’ve been studying blockchain for a long time as you might imagine, authenticity of product and of experience is extremely important.”
In addition to experiments with Roblox, late last year Gucci partnered with startup Genies to outfit user avatars.
Virtual items from real world retailers have been relatively slow to pop up inside digital worlds, though as user perceptions of paying for digital goods have shifted, platforms are moving to capitalize.
“We don’t partner with very many brands,” Roblox exec Christina Wootton tells TechCrunch. “One thing that was very special when we started speaking with Gucci is that they took the time to understand our platform and what works well for designers and creators in our community.”
For this morning’s column, Alex Wilhelm looked back on the last few months, “a busy season for technology exits” that followed a hot Q4 2020.
We’re seeing signs of an IPO market that may be cooling, but even so, “there are sufficient SPACs to take the entire recent Y Combinator class public,” he notes.
Once we factor in private equity firms with pockets full of money, it’s evident that late-stage companies have three solid choices for leveling up.
Seeking more insight into these liquidity options, Alex interviewed:
- DigitalOcean CEO Yancey Spruill, whose company went public via IPO;
- Latch CFO Garth Mitchell, who discussed his startup’s merger with real estate SPAC $TSIA;
- Brian Cruver, founder and CEO of AlertMedia, which recently sold to a private equity firm.
After recapping their deals, each executive explains how their company determined which flashing red “EXIT” sign to follow. As Alex observed, “choosing which option is best from a buffet’s worth of possibilities is an interesting task.”
Thanks very much for reading Extra Crunch! Have a great weekend.
Senior Editor, TechCrunch
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The Tonal EC-1
On Tuesday, we published a four-part series on Tonal, a home fitness startup that has raised $200 million since it launched in 2018. The company’s patented hardware combines digital weights, coaching and AI in a wall-mounted system that sells for $2,995.
By any measure, it is poised for success — sales increased 800% between December 2019 and 2020, and by the end of this year, the company will have 60 retail locations. On Wednesday, Tonal reported a $250 million Series E that valued the company at $1.6 billion.
Our deep dive examines Tonal’s origins, product development timeline, its go-to-market strategy and other aspects that combined to spark investor interest and customer delight.
We call this format the “EC-1,” since these stories are as comprehensive and illuminating as the S-1 forms startups must file with the SEC before going public.
Here’s how the Tonal EC-1 breaks down:
- Part 1: How a homegrown experiment became one of the fastest-growing companies in fitness tech
- Part 2: Millions of dollars and 3.5 years, and it all came down to this
- Part 3: Building online communities for fun, profit and product
- Part 4: Can Tonal become the luxury fitness market champion?
We have more EC-1s in the works about other late-stage startups that are doing big things well and making news in the process.
What to make of Deliveroo’s rough IPO debut
Why did Deliveroo struggle when it began to trade? Is it suffering from cultural dissonance between its high-growth model and more conservative European investors?
Let’s peek at the numbers and find out.
Kaltura puts debut on hold. Is the tech IPO window closing?
The Exchange doubts many folks expected the IPO climate to get so chilly without warning. But we could be in for a Q2 pause in the formerly scorching climate for tech debuts.
Is Substack really worth $650M?
A $65 million Series B is remarkable, even by 2021 standards. But the fact that a16z is pouring more capital into the alt-media space is not a surprise.
Substack is a place where publications have bled some well-known talent, shifting the center of gravity in media. Let’s take a look at Substack’s historical growth.
RPA market surges as investors, vendors capitalize on pandemic-driven tech shift
Robotic process automation came to the fore during the pandemic as companies took steps to digitally transform. When employees couldn’t be in the same office together, it became crucial to cobble together more automated workflows that required fewer people in the loop.
RPA has enabled executives to provide a level of automation that essentially buys them time to update systems to more modern approaches while reducing the large number of mundane manual tasks that are part of every industry’s workflow.
E-commerce roll-ups are the next wave of disruption in consumer packaged goods
This year is all about the roll-ups, the aggregation of smaller companies into larger firms, creating a potentially compelling path for equity value. The interest in creating value through e-commerce brands is particularly striking.
Just a year ago, digitally native brands had fallen out of favor with venture capitalists after so many failed to create venture-scale returns. So what’s the roll-up hype about?
Hack takes: A CISO and a hacker detail how they’d respond to the Exchange breach
The cyber world has entered a new era in which attacks are becoming more frequent and happening on a larger scale than ever before. Massive hacks affecting thousands of high-level American companies and agencies have dominated the news recently. Chief among these are the December SolarWinds/FireEye breach and the more recent Microsoft Exchange server breach.
Everyone wants to know: If you’ve been hit with the Exchange breach, what should you do?
5 machine learning essentials nontechnical leaders need to understand
Machine learning has become the foundation of business and growth acceleration because of the incredible pace of change and development in this space.
But for engineering and team leaders without an ML background, this can also feel overwhelming and intimidating.
Here are best practices and must-know components broken down into five practical and easily applicable lessons.
Embedded procurement will make every company its own marketplace
Embedded procurement is the natural evolution of embedded fintech.
In this next wave, businesses will buy things they need through vertical B2B apps, rather than through sales reps, distributors or an individual merchant’s website.
Knowing when your startup should go all-in on business development
There’s a persistent fallacy swirling around that any startup growing pain or scaling problem can be solved with business development.
That’s frankly not true.
Dear Sophie: What should I know about prenups and getting a green card through marriage?
I’m a founder of a startup on an E-2 investor visa and just got engaged! My soon-to-be spouse will sponsor me for a green card.
Are there any minimum salary requirements for her to sponsor me? Is there anything I should keep in mind before starting the green card process?
— Betrothed in Belmont
Startups must curb bureaucracy to ensure agile data governance
Many organizations perceive data management as being akin to data governance, where responsibilities are centered around establishing controls and audit procedures, and things are viewed from a defensive lens.
That defensiveness is admittedly justified, particularly given the potential financial and reputational damages caused by data mismanagement and leakage.
Nonetheless, there’s an element of myopia here, and being excessively cautious can prevent organizations from realizing the benefits of data-driven collaboration, particularly when it comes to software and product development.
Bring CISOs into the C-suite to bake cybersecurity into company culture
Cyber strategy and company strategy are inextricably linked. Consequently, chief information security officers in the C-Suite will be just as common and influential as CFOs in maximizing shareholder value.
How is edtech spending its extra capital?
Edtech unicorns have boatloads of cash to spend following the capital boost to the sector in 2020. As a result, edtech M&A activity has continued to swell.
The idea of a well-capitalized startup buying competitors to complement its core business is nothing new, but exits in this sector are notable because the money used to buy startups can be seen as an effect of the pandemic’s impact on remote education.
But in the past week, the consolidation environment made a clear statement: Pandemic-proven startups are scooping up talent — and fast.
Tech in Mexico: A confluence of Latin America, the US and Asia
Knowledge transfer is not the only trend flowing in the U.S.-Asia-LatAm nexus. Competition is afoot as well.
Because of similar market conditions, Asian tech giants are directly expanding into Mexico and other LatAm countries.
How we improved net retention by 30+ points in 2 quarters
There’s certainly no shortage of SaaS performance metrics leaders focus on, but NRR (net revenue retention) is without question the most underrated metric out there.
NRR is simply total revenue minus any revenue churn plus any revenue expansion from upgrades, cross-sells or upsells. The greater the NRR, the quicker companies can scale.
5 mistakes creators make building new games on Roblox
Even the most experienced and talented game designers from the mobile F2P business usually fail to understand what features matter to Robloxians.
For those just starting their journey in Roblox game development, these are the most common mistakes gaming professionals make on Roblox.
CEO Manish Chandra, investor Navin Chaddha explain why Poshmark’s Series A deck sings
“Lead with love, and the money comes.” It’s one of the cornerstone values at Poshmark. On the latest episode of Extra Crunch Live, Chandra and Chaddha sat down with us and walked us through their original Series A pitch deck.
Will the pandemic spur a smart rebirth for cities?
Cities are bustling hubs where people live, work and play. When the pandemic hit, some people fled major metropolitan markets for smaller towns — raising questions about the future validity of cities.
But those who predicted that COVID-19 would destroy major urban communities might want to stop shorting the resilience of these municipalities and start going long on what the post-pandemic future looks like.
The NFT craze will be a boon for lawyers
There’s plenty of uncertainty surrounding copyright issues, fraud and adult content, and legal implications are the crux of the NFT trend.
Whether a court would protect the receipt-holder’s ownership over a given file depends on a variety of factors. All of these concerns mean artists may need to lawyer up.
Viewing Cazoo’s proposed SPAC debut through Carvana’s windshield
It’s a reasonable question: Why would anyone pay that much for Cazoo today if Carvana is more profitable and whatnot? Well, growth. That’s the argument anyway.