According to a recent report from venture capital firm Konvoy, publicly traded gaming companies are holding a substantial $45 billion in cash and cash equivalents, potentially paving the way for further consolidation in the $188 billion video games market. Key players like Activision Blizzard, Electronic Arts, Singapore’s Sea, Japan’s Nintendo and Bandai Namco, South Korea’s Nexon, and China’s NetEase collectively possess $45.1 billion in liquid assets, as per Konvoy’s analysis of their latest public reports. This financial strength positions them to consider acquisitions aimed at expanding their intellectual property and product offerings.
In particular, these gaming companies are focusing on strategies to enhance gamer engagement, such as live-service games that provide ongoing content updates and paid subscription packages offering free games and access to cloud gaming. This approach allows players to enjoy games via the cloud, eliminating the need for traditional downloads.
Overall, publicly listed gaming companies experienced a successful year in 2023. Konvoy notes that the VanEck Video Gaming and eSports ETF, which tracks the MVIS Global Video Gaming & eSports Index, has risen by 20% year-to-date, surpassing the S&P 500 index’s 12% year-to-date growth.
Additionally, Big Tech giants like Amazon, Microsoft, Google, Apple, Meta, Netflix, Tencent, and Sony are well-positioned with a combined $229.4 billion in available cash for potential gaming-related deals.
Konvoy anticipates that the recent Microsoft-Activision deal, where Microsoft acquired Activision Blizzard for $69 billion, will stimulate further merger and acquisition activity in the gaming industry, potentially giving rise to a new generation of gaming companies. This move strengthens Microsoft’s presence in cloud gaming, which is set to open doors for emerging game developers, infrastructure companies, and gaming platforms.
Venture capital investment in the video game sector faced a 64% year-over-year decline in the third quarter of 2023, signaling a slowdown compared to the industry’s booming period in 2020 and 2021. Gaming startups raised $454 million globally during this period, down 9% quarter-over-quarter and more than 64% from the same period a year ago. Nevertheless, Konvoy expects a brighter outlook for gaming venture capital and startups in the coming year as investment conditions improve. Although funding for gaming companies is returning to a sustainable new normal, it is expected to continue at a similar pace for the next few years.
The gaming industry has faced challenges due to macroeconomic conditions, including high inflation and rising interest rates impacting consumer discretionary spending. While 2020 witnessed robust growth in the gaming sector, 2022 and 2023 have been more challenging as central banks raised interest rates. Despite these economic headwinds, the global player base continues to grow, reaching 3.381 million players worldwide, according to Konvoy.
The video game market remains substantial, with projected sales of $188 billion in 2023, a 3% increase from the previous year. Long-term growth prospects for the industry look promising, with Konvoy forecasting a compound annual growth rate of 9% over the next five years, leading to overall sales of $288 billion by 2028. This projection suggests that the gaming industry will continue to thrive in the years to come.
Vancouver-based startup Hiive has secured $4.2 million in fresh capital for its innovative marketplace, facilitating the trading of shares in privately held venture-backed firms on the secondary market. Established in 2021, Hiive’s mission is to “unleash the full potential of the private markets” by creating an automated platform for private share transactions. It utilizes bid, ask, and trade prices provided directly by verified buyers and sellers on its platform to deliver precise, real-time valuations for late-stage startups, mirroring the methodology employed in public market valuations.
This funding infusion coincides with a period when numerous late-stage technology companies are choosing to remain private for extended periods, due to a general slowdown in the tech market. This has led to an increased demand from investors and employees seeking to liquidate their shares.
Salil Deshpande, General Partner at Uncorrelated Ventures, remarked, “Many funds are active secondary buyers, and with IPO markets being choppy or companies just choosing to stay private longer, there are many more secondary sellers.”
Hiive’s platform allows users to monitor the fluctuation of a private company’s stock, similar to public stocks. As of the previous month, the platform hosted open offerings valued at approximately $1.9 billion, with over 570 companies actively listed, including Seattle-based startups Outreach, Icertis, and Convoy. Hiive boasts more than 12,000 users, including over 1,000 institutional members.
Over the past year, the startup has witnessed substantial growth, increasing its rate and volume of transaction completion by around six times. It competes with other private market share platforms like EquityZen and Birel.
Hiive generates revenue by imposing a minimum fixed dollar amount and a commission on transactions facilitated through its platform.
CEO Sim Desai, formerly a Managing Director at Toronto-based investment bank Setter Capital, leads Hiive. The company was co-founded by Prab Rattan, Stuart Eccles, and Sarah Huggins. In the course of its expansion, Hiive has expanded its workforce from six employees at the beginning of 2022 to a current count of 45.
Uncorrelated Ventures spearheaded the funding round, with contributions from Splash Capital, Harmony Venture Partners, Hack VC, Agmen Capital, and Renaud Laplanche, co-founder of Lending Club. Hiive has disclosed a post-money valuation of $77 million.
The journey that began in January 2022 when Microsoft first announced its intentions to acquire the gaming conglomerate Activision Blizzard King has been a long and eventful one. After successfully navigating a Federal Trade Commission lawsuit and meeting the requirements of UK antitrust authorities, it’s now official: Microsoft has taken ownership of the creators and publishers behind iconic titles like Call of Duty, Fallout, Overwatch, WarCraft, Diablo, Candy Crush, and many more.
In an unusual twist, there’s even a trailer for this corporate acquisition. The trailer showcases iconic moments from Microsoft’s previous acquisitions, including Halo and Fallout, as well as memorable moments from Activision Blizzard’s titles, including a meme-worthy StarCraft scene with its “Hell” preface removed.
Phil Spencer, the CEO of Microsoft Gaming, expressed his excitement, saying, “Whether it was the late nights spent playing the Diablo IV campaign with friends, gathering the whole family for our weekly Guitar Hero night in the rec room, or achieving epic victories in Candy Crush, some of my most cherished gaming memories were born from the creative studios of these teams. It’s truly incredible to welcome such legendary talent to Xbox.”
With this all-cash acquisition, Microsoft has now risen to become the third-largest gaming company by revenue, trailing only Tencent and Sony. This monumental deal surpasses Microsoft’s previous largest acquisition of LinkedIn in 2016 and bolsters its gaming division with 30 internal game development studios, including the renowned Bethesda group, for which it paid $7.6 billion in 2021. Activision Blizzard comprises over 8,500 employees across nine game studios, while its King mobile gaming division operates in over a dozen locations.
While Microsoft initially announced plans to integrate Activision Blizzard games into its Game Pass subscription package, this integration won’t take place until at least 2024. The concerns surrounding the creation of a dominant force in game streaming were a significant focus for both the FTC and UK regulators. In response, Microsoft worked to address these concerns by offering its games on rival platforms, such as GeForce Now, and in Europe, striking deals with competitors like Ubisoft.
Efforts to alleviate concerns that their titles would become exclusive to Windows and Xbox were met with mixed success. Sony reluctantly signed a 10-year deal for Call of Duty PlayStation releases after vocal opposition in the press and courtrooms. However, it’s widely believed that Activision Blizzard’s games may not remain platform-agnostic in the future, as Microsoft’s acquisition of Bethesda and its subsequent actions suggest a preference for their in-house platforms over time.
Bobby Kotick, the CEO of Activision Blizzard, confirmed in an email to employees, published on the company’s website, that he will continue as CEO of ABK, reporting to Phil Spencer, until the end of 2023. Many had expected Kotick, who has faced challenges in recent years, to step down from the company he had led for 33 years. Now that the Microsoft acquisition has been finalized, he will have approximately $375 million for his future endeavors.
This week, Replit, a developer tooling vendor, has unveiled a set of initiatives aimed at democratizing AI for developers. Replit’s cloud-based software development platform boasts over 20 million users and has steadily been enhancing its generative AI capabilities in the past year. This enhancement includes the introduction of the GhostWriter AI code completion tool and a strategic partnership with Google. So far, access to GhostWriter has been limited to a select group of Replit users, but that’s about to change.
As of October 9, Replit is directly incorporating GhostWriter into its core platform, making the generative AI code completion tool accessible to all of its users. This move is labeled as “AI for all.” Alongside the integration of GhostWriter, Replit has also announced a new version of its purpose-built open source generative AI large language model (LLM) for coding, known as replit-code-v1.5-3b.
Replit’s open source coding LLM is positioned as a competitive alternative to StarCoder LLM, jointly developed by ServiceNow and Hugging Face, as well as Meta’s Llama CodeLlama 7B.
Amjad Masad, CEO of Replit, emphasized their mission of providing accessibility during a live-streamed session at the AI Engineer Summit. He stated, “Our mission is to empower the next billion developers, and we didn’t want to create a world where some people have access to GhostWriter while others don’t.”
With this integration, Replit is shedding the GhostWriter name entirely and instead establishing AI as a core feature available to all users. According to Masad, Replit has users worldwide coding on various devices, including laptops and mobile phones. Now, all of these users can become AI-enhanced developers.
Masad believes that this deployment of AI-enhanced coding will be one of the largest in the world. He anticipates significant demands on both GPU and CPU resources.
Replit’s generative AI capabilities are not superficial additions on top of someone else’s LLM; rather, they are based on proprietary open source technology that the company has developed. Michele Catasta, VP of AI at Replit, explained during a live-streamed session at the AI Engineer Summit that their code completion feature relies on a bespoke large language model. This model was trained on open source code from GitHub as well as code developed by the Replit user community.
In May, Replit introduced replit-code-v1-3b LLM, and now they have unveiled replit-code-v1.5-3b, a significant update that expands the LLM’s capabilities. This updated model was trained on a massive 1 trillion tokens of code and supports 30 different programming languages.
Catasta highlighted the significance of data quality in the model’s training, underscoring the meticulous work Replit has done in this regard. The hardware used for training also played a vital role, utilizing 128 Nvidia H100-80G GPUs, which are highly sought after. To Replit’s knowledge, this is the first model officially announced to be trained on the H100 and released as open source, marking a noteworthy milestone.
In 2022, leaders within the U.S. military technology and cybersecurity community expressed their view that 2023 would serve as the pivotal “reset year” for quantum computing. They made an estimation that aligns the timeline for securing systems against quantum threats with the emergence of the first quantum computers capable of jeopardizing security, both anticipated within a span of approximately four to six years. It is of paramount importance that industry leaders swiftly grasp the security implications of quantum computing and take proactive measures to address the challenges poised by this formidable technology.
Quantum computing stands at the forefront of technological innovation, presenting an unparalleled array of challenges while holding the promise of unprecedented computational prowess. Unlike conventional computing, which relies on binary logic (comprising 0s and 1s) and sequential operations, quantum computing harnesses the power of quantum bits, or qubits, capable of representing an infinite spectrum of potential outcomes. This characteristic empowers quantum computers to execute an immensely large number of calculations concurrently, exploiting the probabilistic nature of quantum mechanics.
The Potential of Quantum Computing
The potential inherent in quantum computing lies in its capacity to process vast volumes of data in parallel, resulting in exponential leaps in computational capabilities when compared to classical computers. Whereas a classical computer can determine the outcome of a single-person race, a quantum computer can simultaneously analyze a race involving millions of participants with diverse routes and ascertain the most probable victor through probability-based algorithms. Quantum computers are exceptionally well-suited to tackle optimization problems and simulations featuring multiple probabilistic outcomes, thereby revolutionizing domains such as logistics, healthcare, finance, cybersecurity, weather prediction, agriculture, and more. Their influence could extend to the realm of geopolitics, fundamentally reshaping global power dynamics.
Quantum computing necessitates a fundamentally distinct approach to programming due to its novel logical framework. Embracing uncertainty and iterative heuristic methods are imperative for effectively harnessing the potential of this technology. Nevertheless, a substantial hurdle in the field of quantum computing is the challenge of connecting multiple qubits without elevating the likelihood of errors, which remains a critical impediment to the commercial growth of the technology.
A Practical Constraint and Ongoing Research
One practical limitation involves the imperative to shield qubits from the real-world environment to prevent decoherence, which can degrade the quantum state. Currently, achieving isolation involves cooling to extremely low temperatures. Ongoing research endeavors explore diverse methodologies, including photonics and various materials, with the goal of rendering quantum processors more scalable and commercially viable.
A Thousand-Qubit Milestone
Over the past decade, quantum computing has achieved remarkable progress. For instance, in 2017, IBM unveiled a 50-qubit chip, and in 2019, it claimed to have surpassed the fastest traditional supercomputer in specific computations. Further advancements are anticipated, with the race to develop 1,000-qubit quantum computers already in progress.
While short-term expectations regarding quantum computing may sometimes be overblown, the long-term implications are poised to be transformative. Increasing global interest across various sectors is accompanied by substantial financial commitments, laying the groundwork for extraordinary practical innovations in the years ahead.
Crucial Development of Error-Correcting Qubits
To fully unlock the potential of quantum computing, the development of error-correcting qubits assumes critical importance. Presently, quantum processors often necessitate a significant number of standard qubits to produce a single error-correcting qubit. Nevertheless, there is optimism within the community that this challenge will be effectively addressed in the coming years.
Quantum Computing’s Promise
Quantum computing holds the promise of reshaping our world by bestowing upon us unparalleled computational capabilities and revolutionizing diverse industries and fields. While challenges persist, the persistent progress in quantum technology suggests that breakthroughs could materialize at any moment. As we harness the potential of quantum computing, it is poised to emerge as the most influential of all frontier technologies, propelling significant advancements within our society.