A Returner’s Successful Investment Method - Chapter 627



Only Krnovel

Episode 627 UDT (2)

Amazing Electronics (AE).

This gaming company, headquartered in Redwood City, California, was founded in 1983.

The reason for its establishment is quite interesting.

Maze Simonza, who was NPL’s marketing director at the time, was a game enthusiast and predicted that games would lead the cultural industry in the future as technology developed.

So he told NPL’s founder and CEO, Stevie Schiller, that NPL should invest in games.

However, Stevie Schiller flatly rejected the offer, saying, ‘Don’t waste my time with games!’

Accordingly, Maze Jimonja left Enple and started his own game company.

That’s AE.

In some ways, he can be seen as similar to Gabe McLen, who saw the growth potential of the game market while working at NS and left the company to found Zellview Corporation.

Of course, we broke up on good terms, and we still maintain a good relationship.

Anyway, AE continued to grow despite going through several crises, and is currently ranked as the 6th largest game company in the world.

And here, CEO Owen Raphael had a huge contribution.

Game company CEOs can be divided into two categories.

Those who value games and those who value money.

It is difficult to clearly divide these two, and it is difficult to say which one is right.

Games are art and culture that incorporate cutting-edge technology. But at the same time, it is a huge industry in which huge amounts of capital and manpower are invested.

In the past, the gaming industry was simple.

All you have to do is develop a game, package it, and sell it through a retail store.

However, currently, there are package sales, flat fee, partial payment, random box, microtransaction, DLC, battle pass, etc.

Billing methods have become more diverse than in the past.

Therefore, creating a good profit structure was as important as making a good game.

Owen Raphael didn’t know much about game development, but he had a great talent for creating a profit structure.

Owen Raffaello, who became CEO, thoroughly analyzed the games produced by AE.

The most important thing to consider here is whether or not there is a replacement for the game.

For games with substitute products, consumers can leave if they don’t like them. But what if it’s a game with no substitute?

No matter how dissatisfied you become, you will have no choice but to continue.

He focused on AE’s main focus, sports games.

AE has several famous franchise series, but the most famous of them are sports games.

FIFA (soccer), MLB (baseball), NBA (basketball), NFL (American football), NHL (ice hockey), PGA (golf), etc.

What is the most important thing in sports games?

That’s the realism of playing a real game.

And the easiest and most convenient way to express this realism is to insert real-life stadiums, players, commentary, etc. into the game.

AE signed licensing agreements with numerous sports clubs and made it possible for real players to play in the game.

This was an area that other game companies could not easily enter, as it involved a huge amount of capital and negotiating power, and the contractual relationships were complex.

So, in sports games, a system was introduced that allowed gamers to create their own teams and compete with other users, and related products were sold through micropayments.

This included not only players, but also coaching staff, items, consumables, and skins.

They even sold some items in a random box so that gamers could pay until they picked what they wanted, and later even applied NFTs to generate additional income.

Additionally, by releasing a new version every year by adding a few features and players and slightly improving the graphics, and discontinuing compatibility with previous versions, it has made consistent profits every year.

As a result, user ratings dropped to 0 and criticism poured in, but he did not care.

CEO Raphael said this to the protesting gamers:

“If I run out of ammo while playing an FPS game and someone offers to refinance the game for $1, I will gladly pay $1. Buying necessary items with money is one of the ways to enjoy the game more fun. If you don’t like it, you can fight with an empty gun or wander around looking for bullets. “This is a great business that can increase users’ options, and from the game company’s perspective, it is a great help in developing better games in the future.”

Despite criticism that it turned the game into a gambling den, this method reaped enormous profits, which translated into sales and stock prices.

CEO Raphael began acquiring famous game studios based on his enormous cash cow.

Developers who initially refused had no choice but to accept the acquisition offer when they saw the bag of money he held out.

Developers thought they would be able to continue developing their games with the support of a large gaming company called AE.

But support came at a price.

AE ignored the development culture of the studios in question and interfered with the development process at every turn.

They also forced single-player games to create multiplayer modes or asked them to add unreasonable charging elements.

In this way, if a game failed, the series was mercilessly halted and the development team was disbanded.

As these incidents were repeated, fans of the game became angry at AE, thinking, ‘AE ruined a game series that was doing well!’

In the end, game failures continued one after another. Owen Raffaello has left AE.

He later joined UDT Technology as an advisor, and was appointed as the new CEO a year ago.

* * *

Seonwoo gritted his teeth.

“My blood still boils when I think about how Owen Raphael ruined the Dead Effect series while he was at AE. “You can’t believe they created and released such a masterpiece like that.”

“Hmm.”

From a gamer’s perspective, it’s understandable to be angry.

As you can see from what he did at AE, the only thing CEO Raphael cares about is profit.

“But this time, you’re going to go to UDT and stab developers and gamers like this? “This is truly trash.”

In fact, elements of anxiety were already there.

Six years ago, UDT abolished its existing perpetual license policy and moved all subsequent versions to a subscription system.

And according to the terms and conditions, UDT can change the royalty policy at any time, and this can be applied retroactively.

You might think that if it’s expensive, you shouldn’t use it… … The problem is that there is no suitable replacement for the UDT engine.

It is common for platform companies to monopolize the market by initially offering it for free, and then start collecting money.

There are countless similar examples.

UDT also found out about this and began revising its rate plan.

“Anyway, isn’t that the company’s intention no matter how much the fee is set?”

At my words, Seonwoo shook his head resolutely.

“No, this is a different case.”

“what”

“Because the UDT engine was not created by UDT alone.”

“… … huh?”

Seonwoo explained.

Game engines have several differences from other software.

General software is used only with the functions provided within the software. However, the game engine is used in a way that is customized to suit the game being developed.

UDT applies the customized engine again to upgrade the UDT engine, or develops new modes in cooperation with the relevant game company.

Another thing that cannot be left out of UDT Engine is the asset market.

Here, you can buy, sell, or share numerous resources, scripts, and objects used in the UDT engine for free.

For example, let’s assume there is a car made with a UDT engine.

Developers may regret that this car is only used in their own games. Then you can upload it to the asset market and sell it to other developers.

Developers who purchase it can save time and effort coding to create a car.

UDT made profits by taking a commission here.

Because the asset market is so active, there are people who do not develop games themselves but just create and sell resources that other developers need.

Thanks to this, the number of users of UDT Engine increased further, and a virtuous cycle occurred in which the asset market was revitalized again.

“In short, it is no exaggeration to say that the current UDT engine was created by the collaboration of numerous game companies and developers. But do you think developers will be convinced if we arbitrarily raise the price?”

“but.”

It is fortunate that the new rate plan is somewhat acceptable.

However, this is a serious level even for someone who does not know much about the gaming industry. Is this truly ridiculous profiteering?

It’s not just me who thinks that way, everyone in the industry does the same.

I remembered the first time.

Wasn’t this supposed to happen next year?

In addition, the usage fee seems to have increased compared to the first time.

Sunwoo told me the reason.

“Probably the lower app market fees will also have an impact.”

“huh?”

Due to continued lawsuits, public opinion wars, anti-monopoly lawsuits in each country, and the growth of Cosmic Store, Gobble eventually allowed external payments along with lowering in-app payment fees.

When one of the two major markets gave up its 30 percent commission policy, this immediately led to increased profits for mobile game producers.

“Judity must have felt a bit sick to her stomach after watching this. “Mobile games made with the UDT engine make so much money, so why is this our only profit?”

“ah… … .”

In short, since profits increased by reducing app market fees, did they mean that they should also pay some?

At that moment, a phone call came.

The sender is Tom Scott, CEO of Legend Games.

I got a call.

“hello.”

[Have you seen the UDT news?]

“yes. I was already going to call you because of that. “What’s the atmosphere like there?”

[Everyone was surprised. Same goes for me.]

Legend Games is a competitor competing with UDT for engine market share.

Maybe that’s why I could feel the agitation in his voice.

I asked him.

“What do you think about the revised rate plan?”

[To be honest, it seems crazy. Without going crazy, I wonder how they came up with this rate plan.]

“Everyone seems to have similar thoughts.”

CEO Tom Scott asked curiously.

[What do you think, CEO? Do you think this plan will be successful?]

Regardless of the backlash from game companies and gamers, if this policy is successful, UDT will reap huge profits.

Since this was the first time UDT revamped its rate plan in this way, I know very well what the results will be.