Bonus Episode 6: How Equity Funding Works (With Kelly Wallick)

The Embracer Group name is going away, splitting its mega-conglomerate into three in an attempt to move on from its destructive legacy. But with Lars Wingefors sticking around to lead the holding company, our expectations are tempered. Also: Meta loses billions more as it tries to become the Windows of MR and earnings season is here! You can support Virtual Economy’s growth via our Ko-Fi and also purchase Virtual Economy merchandise! TIME STAMPS [00:01:54] - Embracer Group Splits Into Three Pieces [00:32:32] - Meta MR Losses Mount [00:42:03] - Paradox Q1 FY24 Earnings [00:44:16] - Microsoft Q3 FY24 Earnings [00:49:10] - Investment Interlude [00:53:08] - Quick Hits [01:01:27] - Labor Report SOURCES EMBRACER GROUP ANNOUNCES ITS INTENTION TO TRANSFORM INTO THREE STANDALONE PUBLICLY LISTED ENTITIES AT NASDAQ STOCKHOLM | Embracer Group ASMODEE SECURES FINANCING AGREEMENT OF EUR 900 MILLION AS PART OF SEPARATION, DELEVERAGING THE REMAINING EMBRACER GROUP | Embracer Group OPEN LETTER BY EMBRACER GROUP CEO ABOUT THE TRANSFORMATION INTO THREE STANDALONE PUBLICLY LISTED ENTITIES | Embracer Group A New Era for Mixed Reality | Meta Interim report January – March 2024 | Paradox Earnings Release FY24 Q3 | Microsoft Modern Wolf lays off six staff in studio restructuring | Game Developer ‘It’s been really painful’: Ex-Lionhead devs explain why they’ve announced, and shelved, a new game | VGC INVESTMENT INTERLUDE Atari Revives Infogrames as a Publishing Label | NewsWire Krafton acquires minority stake in Forever Skies developer Far From Home | Game Developer Rummikub maker Goliath continues push into hobby gaming with Lucky Duck Games buyout | BoardGameWire CMON buys Japon Brand, the company which introduced the world to Love Letter and Machi Koro | BoardGameWire

Two months after Take-Two said it wasn’t planning layoffs it has… well… by now you know. Also, we’re trying something new and fun with this episode. Join us for a lively discussion about keeping the industry healthy and a deep dive into what the heck differentiates III from AA! You can support Virtual Economy’s growth via our Ko-Fi and also purchase Virtual Economy merchandise! TIME STAMPS [00:01:45] - Discussion Time! (How to build a healthier industry and just what does “indie” mean these days?” [00:23:49] - Investment Interlude [00:34:19] - Quick Hits [00:41:01] - Labor Report SOURCES Bold Spirit Games Has Laid Off 30 | Bold Spirit Games (@BoldSpiritGames) on Twitter Palia Dev Lays Off 35 Percent of Workers Only a Few Months After Beta Release | IGN EA reportedly kills Apex Legends' UK-based QA team | Game Developer Take-Two Interactive - Form 8-K | Take-Two Interactive Meow Wolf to cut 165 jobs across multiple states | Santa Fe Reporter Kwalee lays off unknown number of staff as it "reshapes business" | GamesIndustry Jeff and Annie Strain’s Prytania Media Have Closed Possibility Space | Russell Peterson on LinkedIn INVESTMENT INTERLUDE Atari has bought Rollercoaster Tycoon 3 for $7m | Eurogamer Following Baldur's Gate 3, WotC And Hasbro Are Investing $1 Billion In Their AAA Game Ecosystem | GameSpot PUBG maker Krafton leads $15M investment in to UK studio Red Rover Interactive | Game Developer

We’ve come full circle. Embracer Group just took a massive loss to get some much-needed cash in hopes of filling a seemingly bottomless hole of debt. Saber is gone. Zen is gone. 4A is gone. Gearbox is gone. Also, SAG-AFTRA may strike against video game companies, some new studios are popping up, but many others are still laying off and closing. You can support Virtual Economy’s growth via our Ko-Fi and also purchase Virtual Economy merchandise! TIME STAMPS [00:00:30] - GDC and PAX East Recap [00:11:27] - Gaming Safety Coalition [00:14:53] - Circana Report on U.S. Video Game Spending for February 2024 [00:29:57] - GameStop Q4 FY24 Earnings [00:33:03] - Investment Interlude [00:47:40] - Divestment Dinterlude [01:03:42] - Quick Hits [01:16:04] - Labor Report SOURCES Gaming Safety Coalition | Gaming Safety Coalition GameStop Reports Fourth Quarter and Fiscal Year 2023 Results | GameStop Report: Australian studio Torus Games effectively shuts down after 30 years | Game Developer Eggnut is Closing | Eggnut (@eggnutgames) on Twitter Deviation Games is Closing | Kriste Stull on LinkedIn Rooster Teeth Shut Down By Warner Bros. Discovery | Deadline Hollywood Crop Circle Update | Jennifer Klasing on LinkedIn Velan Studios Layoffs | Velan Studios on LinkedIn Something Wicked Layoffs | Eric Webb on LinkedIn Smilegate Barcelona reportedly closed and all employees let go | VGC Nintendo makes cuts to US QA contractors | GamesIndustry A MESSAGE FROM MAX HOBERMAN, CEO OF CERTAIN AFFINITY | Certain Affinity SAG-AFTRA “50/50, If Not More Likely” To Strike Against Video Game Companies Soon | Deadline Hollywood Microsoft voluntarily recognizes 600-strong Activision Blizzard QA union | Game Developer Sega of America workers ratify union contract, protecting 150 employees | Polygon INVESTMENT INTERLUDE TURTLE BEACH ANNOUNCES TRANSFORMATIONAL ACQUISITION OF PDP | Turtle Beach Virtuos acquires Beyond-FX | GamesIndustry Sensor Tower acquires Data.ai | GamesIndustry Stellar Blade studio Shift Up files for IPO | GamesIndustry Shinji Mikami founds new studio, Kamuy Inc. | Game Developer Popularium secures $2m seed funding for next game by Magic: The Gathering creator Richard Garfield | GamesIndustry EMBRACER GROUP CEASES ALL OPERATIONS IN RUSSIA THROUGH THE DIVESTMENT OF SELECTED ASSETS FROM THE OPERATIVE GROUP SABER INTERACTIVE | Embracer Group Tencent reportedly takes over two ByteDance games teams | GamesIndustry The developer of the two-dimensional game "Nikke" applied for listing at a valuation of 3 trillion won, and Tencent held 24% of the shares Game Grand View | GameLook.com.cn

Triple-A game development as we know it is unsustainable. It doesn't matter if a game succeeds or fails, the corporate machine is grinding developers up and spitting them out by the thousands. Things need to change.  You can support Virtual Economy’s growth via our Ko-Fi and also purchase Virtual Economy merchandise! TIME STAMPS [00:01:29] - Circana Report on U.S. Video Game Spending for January 2024 [00:07:04] - Investment Interlude [00:18:43] - Quick Hits [00:21:25] - Labor Report [00:43:33] - FAFO! SOURCES An Important Update from PlayStation Studios | SIE Blog Difficult News About Our Workforce | SIE Blog Continuing to evolve our business and teams | EA Respawn's Star Wars FPS Is Canceled, But Work on Next Jedi Game, Black Panther and Iron Man Will Continue | IGN Marcus Lehto has departed EA | Marcus Lehto (@game_fabricator) on Twitter EA cutting "small number" of staff as it sunsets two mobile games | GamesIndustry Supermassive Confirms Layoffs | Supermassive (@SuperMGames) on Twitter British Game Maker Supermassive Set to Lay Off 90 Workers | Bloomberg (Paywall) Die Gute Fabrik is Stopping Production | Die Gute Fabrik (@gutefabrik) on Twitter ESL Faceit Group lays off 15% of staff 2 years after $1.5B merger | GamesBeat Star Citizen developer hit with layoffs amid claims of a "highly toxic company" | Eurogamer Wildlife Studios is laying off 21 percent of its workforce | Game Developer Keoken Studios lays off Four | Koen Deetman on LinkedIn Layoffs at Radical Forge | Radical Forge (@RadicalForge) on Twitter Deck Nine Games lays off 20 percent of staff | Game Developer ‘Grand Theft Auto’ Maker Rockstar Games Asks Workers to Return to Office Five Days a Week | Bloomberg (Paywall) Nintendo Files Lawsuit Against Creators of Switch Emulator Yuzu | Stephen Totilo (@stephentotilo) on Twitter INVESTMENT INTERLUDE GamerSafer acquires Minecraft-focused Minehut server community | GamesBeat Embracer Group to Sell Saber, Developer of a New ‘Star Wars’ Game Remake, in $500 Million Deal | Bloomberg (Paywall)

The console market is going through major changes as hardware prices stay high and first party needs to pivot audience strategy. Nintendo may be struggling to find a break-even for its Switch successor, prompting a later release than we anticipated. Also: Embracer Group woes continue, Hasbro loses a ton. This is episode is sponsored by Magic Mind, a supplement shot that includes ingredients to lower your stress, reduce fatigue, and boost your immune system. You can get 20% off your order of Magic Mind at https://www.magicmind.com using the code VirtualEconomy20.  You can support Virtual Economy’s growth via our Ko-Fi and also purchase Virtual Economy merchandise! TIME STAMPS [00:01:12] - Sony Earnings for Q3 FY24 [00:18:37] - Starbreeze Earnings for FY23 [00:26:13] - Embracer Group Earnings for Q3 FY24 [00:41:48] - Bandai Namco Earnings Notes for Q3 FY24 [00:43:48] - Hasbro Earnings Notes for FY23 [00:46:46] - Xbox Reveals Multiplatform Plans [00:49:10] - Epic Games Store Year in Review 2023 [00:52:22] - Investment Interlude [01:04:24] - Quick Hits [01:13:12] - Labor Report [01:22:11] - What Happens if the Switch 2 Doesn’t Come Out in 2024? [01:36:13] - Listener Questions SOURCES Sony Earnings for Q3 FY24 | Sony Starbreeze Year-End Report | Starbreeze EMBRACER GROUP PUBLISHES INTERIM REPORT Q3 | Embracer Group Financial Highlights for the Third Quarter of the Fiscal Year Ending March 31, 2024 | Bandai Namco From Software now owns the Elden Ring IP | USPTO Magic, D&D maker Hasbro lost over $1bn in Q4, predicts WotC revenue decline in 2024 | BoardGameWire Xbox’s Promise to Bring More Games to More Players Around the World | Xbox Wire Xbox’s Alleged Multiplatform Plans are Making People Angry Prematurely | Virtual Economy Epic Games Store 2023 Year in Review | Epic Games Epic Games Store is Coming to iOS | Epic Games (@EpicNewsroom) on Twitter Genvid Suffers Layoffs | Seana Cavanagh on LinkedIn Daybreak confirms "less than 15" layoffs | GamesIndustry Scopely layoffs hit Kingdom Maker team | Games Industry Disco Elysium studio laying off nearly 25% of its staff⁠—including the final remaining writer from the original game's credits | PCGamer Everywhere and Mindseye developer Build a Rocket Boy announces layoffs | PCGamesN Global layoffs at Gameloft as staff in Ukraine and Canada confirm redundancies | Pocket Gamer Embracer-owned studio Flying Wild Hog has unionized | Game Developer Things at Toys for Bob may not be so dire | @MauroNL on Twitter Sources: Nintendo Switch 2 will now launch in 2025 | VGC INVESTMENT INTERLUDE Games corporate and VC funding falls 75% to $2.7B in 202 | GamesBeat Monumental to acquire Game Circus | GamesIndustry Former EA and King leaders establish new studio Cult of the North | Game Developer

Microsoft’s layoffs have sent the FTC into a tizzy, adding fuel to the ongoing fire. Also: It’s earnings season, with EA, Microsoft, Capcom, Nintendo, Square Enix, Paradox, Take-Two, Sega, and Meta reporting. We also cover the latest in the layoff storm that continues to drown the industry and Disney’s $1.5B investment in Epic. This is episode is sponsored by Magic Mind, a supplement shot that includes ingredients to lower your stress, reduce fatigue, and boost your immune system. You can get 20% off your order of Magic Mind at https://www.magicmind.com using the code VirtualEconomy20.  You can support Virtual Economy’s growth via our Ko-Fi and also purchase Virtual Economy merchandise! TIME STAMPS [00:01:14] - EA Earnings [00:12:44] - Microsoft Earnings [00:22:59] - Capcom Earnings [00:28:23] - Nintendo Earnings [00:31:09] - Square Enix Earnings [00:37:45] - Paradox Earnings [00:42:38] - Take-Two Earnings [00:49:17] - SegaSammy Earnings [00:53:09] - Meta Earnings (Brief) [00:55:57] - Investment Interlude [01:12:13] - Quick Hits [01:19:36] - Labor Report SOURCES Electronic Arts Reports Strong Q3 FY24 Results | EA Microsoft Earnings Release FY24 Q2 | Microsoft Capcom On Track to Achieve Full-Year Guidance | Capcom Consolidated Results for the Nine Months Ended December 31, 2022 and 2023 | Nintendo Consolidated Financial Results for the Nine-Month Period Ended December 31, 2023 | Square Enix Year-end report January – December 2023 | Paradox Take-Two Interactive Software, Inc. Reports Results for Fiscal Third Quarter 2024 | Take-Two SegaSammy Q3 Results Presentation | SegaSammy Meta Reality Labs loses $4.65B in Q4 | Meta Tencent CEO feels its game business "achieved nothing" during 2023 | Game Developer Embracer lays off staff at Star Trek: Infinite dev Nimble Giant | Game Developer Wayfinder dev Airship Syndicate lays off 12 employees | Game Developer Square Enix absorbs Tokyo RPG Factory | Gematsu Hidden Path Layoffs | Jeff Pobst on LinkedIn Roughly half of Devolver's Artificer studio laid off | Games Industry Devolver Digital CEO Douglas Morin steps down | Games Industry Layoffs at Netease, MiHoYo, Tencent | Core Esports The FTC is Going After Microsoft Over Layoffs | Tom Warren (@tomwarren) on Twitter …And Microsoft has Responded | Tom Warren (@tomwarren) on Twitter INVESTMENT INTERLUDE Nordcurrent snaps up Cinemaware library | Games Industry Disney and Epic Games to Create Expansive and Open Games and Entertainment Universe Connected to Fortnite | Disney Nitro Games receives further €3.5 million to continue Warframe mobile development | Pocket Gamer Six Nations-backer CVC in talks to buy Runescape-maker for £900m | Sky News FromSoftware owner Kadokawa acquires Octopath Traveler studio | Eurogamer

In the wake of 2020’s bombshell revelations about Activision’s miserable culture and history of defending sexual abusers, we hoped that Microsoft would be a better steward for the company’s 13,000 employees. With 1,900 laid off post-acquisition, we are disappointed and saddened at how wrong we were. This is episode is sponsored by Magic Mind, a supplement shot that includes ingredients to lower your stress, reduce fatigue, and boost your immune system. You can get 20% off your order of Magic Mind at https://www.magicmind.com/JANvirtualeconomy using the code VirtualEconomy20.  You can support Virtual Economy’s growth via our Ko-Fi and also purchase Virtual Economy merchandise! TIME STAMPS [00:01:09] - A word about Microsoft and Activision [00:07:07] - Apple kinda-but-not-really complies with European Commission rulings [00:19:03] - The Pokemon Company dragon is stirring, Palworld… [00:24:10] - Investment Interlude [00:30:32] - Quick Hits [00:33:48] - Labor Report [00:54:48] - Twitch Updates Payment Terms for Streamers SOURCES Apple opens App Store to game streaming services | The Verge Apple is bringing sideloading and alternate app stores to the iPhone | The Verge When Apple takes the European Commission for fools… | The Platform Law Blog An Update to Several Streamer Payout Programs | Twitch Inquiries Regarding Other Companies’ Games | The Pokemon Company Microsoft lays off 1,900 Activision Blizzard and Xbox employees | The Verge INTRODUCING JOHANNA FARIES AS THE NEW PRESIDENT OF BLIZZARD ENTERTAINMENT | Blizzard 2K Games makes layoffs at internal studio 31st Union | Game Developer Netmarble liquidates Grand Cross: Metaworld studio Metaverse World | Game Developer Report: Black Forest Games cuts 50% of staff | PC Games Insider Embracer Group Cancels ‘Deus Ex’ Video Game | Bloomberg (Paywall) Outriders developer People Can Fly reportedly lays off "over 30" employees | Eurogamer UK recruitment firm OPM closes after 26 years | GamesIndustry How Goliath bought Prospero Hall’s game assets, but left its heart behind | BoardGameWire Ruiner studio Reikon Games has reportedly laid off around 80% off its staff | VGC PUBG owner Krafton sued in sexual assault, wrongful termination case | Polygon INVESTMENT INTERLUDE Build A Rocket Boy lands $110 million in funding | GamesIndustry

It’s been less than one month, and the industry has already suffered more than 3,500 lost jobs. Also: The Circana report for December 2023 and the full year, a few investments, and a discussion about some challenging changes to the U.S. tax code. Oh, and a bit about that weird Palworld game. You can support Virtual Economy’s growth via our Ko-Fi and also purchase Virtual Economy merchandise! TIME STAMPS [00:11:08] - Circana report on U.S. Video Game Spending for December and Full Year 2023 [00:27:19] - Investment Interlude [00:34:06] - Quick Hits [01:00:58] - Labor Report SOURCES SAG-AFTRA and Replica Studios Introduce Groundbreaking AI Voice Agreement at CES | SAG-AFTRA Replica Studios Agreement for Digital Voice Replicas FAQs | SAG-AFTRA SAG-AFTRA’s AI Voice Acting Deal Was A Powder Keg Waiting To Go Off | Aftermath AI Content on Steam | Valve Report: 3D Realms and Slipgate may have been hit with more layoffs | Game Developer Employees Say ‘Sizable Portion’ Of Gearbox-Owned Studio Has Been Laid Off | Aftermath Playtika reduces staff by 10% | GamesIndustry Discord is laying off 17 percent of employees | The Verge Thunderful Group to restructure operations for strengthened long-term competitiveness | Thunderful Games A Difficult Update about our Workforce | Twitch Changes at Riot and the Road Ahead | Riot An Important Update about Riot’s Future | Riot Wimo Games reportedly shuts down | GamesIndustry Astra Fund repositions as "thinky" publisher Astra Logical following layoffs | Game Developer Playtika reduces staff by 10% | GamesIndustry INVESTMENT INTERLUDE Phoenix Labs execs regroup to form Critical Path Games | Game Developer Second Dinner raises $100 million to continue growing Marvel Snap | Game Developer Tencent completes majority ownership of Dying Light dev Techland | Game Developer Outsourcing studio Obelisk nets $2 million to create original horror title | Game Developer Rocksteady founders have a new, post-Suicide Squad studio | Polygon

It’s been a hard year, folks. As we say goodbye to 2023 and turn our attention to a (hopefully) brighter 2024, we’re recapping recent gaming events, November’s Circana report, and more. You can support Virtual Economy’s growth via our Ko-Fi and also purchase Virtual Economy merchandise! TIME STAMPS [00:02:17] - Circana Report on U.S. Video Game Spending for November 2023 [00:09:11] - GameStop Earnings for Q3 2023 [00:13:28] - What’s Going on in China? [00:19:37] - Twitch: Closing Up Shop in S. Korea, Sexual Content Policy [00:25:10] - Investment Interlude [00:25:59] - Quick Hits [00:27:26] - Labor Report [00:35:45] - Our Feelings on Coverage of the Insomniac Hack (Discussion) [00:45:59] - PAX Unplugged (Discussion) [00:54:47] - The Game Awards (Discussion) [01:02:42] - Our Favorite Games This Year [01:13:48] - Listener Questions SOURCES GameStop Discloses Third Quarter 2023 Results | GameStop Activision Blizzard to pay $47M in gender discrimination settlement | Axios Microsoft announces more Xbox leadership changes as Activision’s Bobby Kotick departs | The Verge Updates on Twitch in Korea | Twitch Sexual Content Policy Update | Twitch Indie publisher Versus Evil has shut down | Game Developer Jukai Studio Has Shut Down | Jukai Studio (@jukaistudio) on Twitter Activision Blizzard to pay $47M in gender discrimination settlement | Axios Microsoft announces more Xbox leadership changes as Activision’s Bobby Kotick departs | The Verge INVESTMENT INTERLUDE Keywords acquires The Multiplayer Group, enhancing its Create division | Keywords

Embracer Group gorged itself during the pandemic when debt was cheap. Now, it’s scrambling to lay off hundreds of people to “win.” Also, Circana report for October, Epic wins against Google, and more. You can support Virtual Economy’s growth via our Ko-Fi and also purchase Virtual Economy merchandise! TIME STAMPS [00:04:03] - Embracer Group Q2 Earnings [00:20:32] - Starbreeze Q3 Earnings [00:24:59] - Epic wins in court against Google [00:27:27] - Circana U.S. Video Game Spending Report for October 2023 [00:33:18] - Investment Interlude [00:45:08] - Quick Hits [01:11:01] - Labor Report SOURCES EMBRACER GROUP PUBLISHES INTERIM REPORT Q2 | Embracer Group Embracer: Human cost of restructure is "significant" but "necessary" | GamesIndustry Starbreeze Q3 FY24 Earnings Report | Starbreeze Epic win: Jury decides Google has illegal monopoly in app store fight | The Verge Humble Games lays off "valued colleagues" as restructuring begins | Game Developer Digital Bros Group announces an organizational review, with an expected workforce reduction of approximately 30% | Digital Bros Kongregate, Digital Bros. cut jobs in a growing wave of video game industry layoffs | Polygon Phoenix Labs lays off 34 staff | GamesIndustry Trading Update and Litigation Settlement | TinyBuild F1 Developer Codemasters Suffers Round of Layoffs | Insider Gaming Embracer lays off 50 more employees and may soon close resurrected TimeSplitters studio Free Radical Design | PC Gamer TimeSplitters studio Free Radical Design closed today, staff say | Eurogamer Insurgency developer New World Interactive affected by layoffs | GamesIndustry League of Geeks lays off 50% of its staff - but does so with compassion | League of Geeks (@leagueofgeeks) on Twitter Rovio closes Studio Lumi | GamesIndustry TripleTopping is Closing | Astrid Refstrup (@AstridMie) on Twitter CD Projekt voluntarily recognizes Polish developer union | Game Developer QA staff at Xbox support dev Experis successfully vote to unionize | Game Developer INVESTMENT INTERLUDE AONIC ACQUIRES NDREAMS FOR $110 MILLION | Ndreams Mobile publisher Nordcurrent acquires River End Games | Game Developer Call of Duty developer Infinity Ward opens new Texas studio | Game Developer Hearst Newspapers Acquires Puzzle Games Platform Puzzmo | Hearst ByteDance says to restructure Nuverse in retreat from gaming business | Reuters ReedPop seeks buyer for Eurogamer, GI, VG247, Rock Paper Shotgun and more | GamesIndustry