KingsIsle Acquired by MGI as #RevivePirate101 Trends

There's been some big news in the Spiral that has everybody talking. KingsIsle has recently been purchased by a company called Media and Games Invest Group. What does this mean for the games we love? Could Pirate101 make a comeback? Let's take a look.

Acquisitions & Gaming

Acquisitions and mergers aren't at all uncommon in the gaming world. This essentially means that one company purchases another and either the two companies merge or the buyer becomes a parent company under which the acquired company operates. Most acquisitions happen with at least some or complete consent from the company being acquired, which certainly seems to be the case with KingsIsle. 

Three professors from the University of Nevada Las Vegas published a study in the Journal of Global Business Insights in 2018 on a study they conducted regarding acquisitions and mergers in the game industry. They looked specifically at acquisitions between 1985 and 2004 and found "both targets and bidders had significant positive returns." Additionally, they noted that gaming companies who acquired other gaming companies (as opposed to non-gaming buyers acquiring gaming companies) tended to have higher returns.

Media and Games Invest Group & KingsIsle

From what I have gathered, Media and Games Invest Group (MGI) is a parent company that acquires existing game and media companies and, like any company, looks to turn a profit. They operate primarily in North America, Europe, the Middle East, and Africa. This could open the door to expanding Wizard101 into other territories.

There are a couple of particularly notable things about this acquisition. First of all, at $126 million, it's the 45th largest acquisition ever in gaming. And that's before potential additional earn-outs for KingsIsle, depending on their performance in 2021, of up to an additional $84 million. That does seem like a lot, but companies like Riot and Blizzard have estimated net worths of over $20 billion, an enormous step up from KingsIsle.

This is also a big deal for MGI, which expects its earnings before taxes and so forth to grow a staggering 60%. That makes KingsIsle one of, if not its largest, company. That means they're likely to pay special attention to it as long as it continues to perform well. Additionally, because MGI is a publicly-traded company, it will allow us some additional insights into how KingsIsle is performing year-to-year. KingsIsle expects a gross income of $32 million in 2021.

Press Release Highlights

MGI published a press release, but it's pretty packed with legal jargon and uninteresting details. Here are a few things to note, though. MGI says "KingsIsle introduces its two strong games Wizard101 and Pirate101 to MGI´s portfolio of MMO games which both will benefit from the entire value-creation-chain at MGI ... Given the strong track record of Wizard101 as well as Pirate101, we expect stable and further increasing cash flows from the free-to-play model with the loyal communities for existing IPs." Some people have misinterpreted this as meaning that Wizard101 will be made free-to-play. This, rather, states that the current free-to-play model used in Wizard101 (it's advertised as a free-to-play game) has a strong track record which they expect to increase MGI's cash flow.

MGI's description of KingsIsle gives us a ton of insightful details:

KingsIsle, was founded in 2005 and is a leading U.S. game developer and publisher. It´s flagship title is the Online PC Game Wizard101 while also its second game Pirate101 is doing well. The mobile IP rights of Wizard101 and Pirate101 are included in the Transaction, while further -loss making- mobile activities are excluded from the Transaction and will be continued by one of the founders. The global pandemic and larger game updates positively impacted KingsIsles 2020 revenues and have been normalized to pre-Covid levels within the pro forma financials above for the valuation of the company. Wizard101 as well as Pirate101 currently almost exclusively generate revenues from the North-American market offering material European revenue growth potential to MGI. There will be further growth potential from launching the game on console as well as developing a mobile version for 2022 onwards.

Let's unpack some of that. This release states that Pirate101 is doing well despite "not considering any new worlds." It further makes note of the "loss making" mobile activities which are evidently still being pursued by the founder (presumably meaning KingsIsle), and which were responsible for the massive layoffs in 2016. It also notes that Covid-19 has helped increase revenue for KingsIsle.

This statement also tells us that any European versions of Wizard101 (published internationally by Gameforge) are not strong sources of revenue. We know, too, that Wizard101's servers in China and Taiwan were shut down in 2015. A vast majority of their income comes from North America. There's a lot of potential for growth in the international department.

Perhaps the biggest bombshell of this statement, though, is that MGI expects to launch Wizard101 and potentially Pirate101 on consoles as well as mobile. This is further confirmed in a statement by Jens Knauber, the COO of Media and Games Invest: 

First and foremost, with Wizard101 and Pirate101 we gain a great and award-winning game for our core portfolio of free-to-play online PC games, with very strong and active player bases as well as various organic growth opportunities, like e.g. expanding the games to additional platforms such as console and mobile and further internationalizing the games.

What could a console and mobile version of Wizard101 look like? I'll explore that more later. But 2022? A mobile version of Wizard101 showing up as early as next year is some big news.

KingsIsle Press Release & Reactions

KingsIsle released their own statement (it doesn't really qualify as a "press release" I suppose, but it's the closest thing to one that they've put out. It includes a number of reassurances: "First of all, let me assure you that the friendly faces that you’ve come to know and love aren’t changing and we’re full steam ahead on the next updates and laying the foundation for the year to come.

The statement from KingsIsle mentions "Gamigo Group" as being the name of the acquiring company. Gamigo is another company having been acquired by MGI, which means there may be a sort of tiered hierarchy of Media and Games Invest > Gamigo Group > KingsIsle. It is unclear at this point what degree of creative control Gamigo Group will have or exert on KingsIsle's games. But they do seem to be on the same page about keeping Wizard101, at the very least, open for the long term: "Gamigo and the team have talked about the long view, how we’re in this to keep the game thriving through the next ten anniversaries and beyond, and we both endeavor to make that happen."

Unfortunately, this statement says "the game" and not "games," so the future of Pirate101 does remain unclear. There's reason to be optimistic, however. 

Some KingsIsle employees have tweeted out statements. Kayly Ginsberg, a.k.a. Vanessa Mythdust, tweeted: "It’s been a very emotional day to say the least. For those asking - yes, I’ll still be on the marketing team for W101 and P101 to supply you all the puns you’ve come to know and love. This is a big change for everyone involved, so please be respectful of that." Renee Wooten tweeted: "For those in the Wizard101 and Pirate101 community that follow me, thank you so much for respecting me, and the team overall, by withholding your comments and speculation that I'm sure you wanted to tag everyone in. I'm proud of you all. Here's to a bright new journey!" These statements leave me a little bit curious, as I'm unsure what big changes are occurring and what might cause emotional reactions outside of the anticipation of the acquisition. Hopefully, more details continue to emerge. 

Game Direction

This is all very exciting, but what does it actually mean for the games we all love? Everything up until this point has been based on data and statements. Exploring the impact of this acquisition on the game is indeed primarily speculative, and that's dangerous territory because it could mean just about anything. The specifics of the agreement are still somewhat shrouded in mystery, and given KingsIsle's history when it comes to transparency, they may continue to be. But I do feel it is both natural and fair for players to wonder what this will mean for the future of Wizard101 and Pirate101.

There is one thing we can expect - changes. The one thing that definitely won't happen is nothing. With new companies involved who are looking for Wizard101 and Pirate101 to grow and generate additional revenue, there will always be changes. The question is to what degree. Even now, Wizard101 doesn't take feedback on everything. They don't tend to take much feedback on the story itself or environments, etc. But on things like spells and so forth, the community has had a pretty direct line to employees via social media and have affected meaningful change in the games. While it appears that this will still be the case, one has to wonder if we'll see additional microtransactions and paywalls, which most of the community would agree have started to appear all too frequently. The addition of Dave Rosen and Craig Beers to the executive team in 2018 certainly triggered some big changes, like crowns rewards events. Will KingsIsle employees and the community still have the say in the game that we currently do? Only time will tell.

#RevivePirate101 & What We Can Do

There has been a recent movement among players to bring additional attention and focus to Pirate101. Part of this effort involves players simply logging in to fill up the game. Another part involves a petition with over 3,000 signatures asking for a revival of the game, which presumably includes new storyline content. Some popular YouTubers have hopped onto the bandwagon as well, and the movement even garnered the attention of gaming site "Massively OP," which published an article on it just last week.

With news of the acquisition, this has players more hopeful than ever that Pirate101 will get new story updates, though there's been no indication whatsoever that the acquisition would lead to such updates. And ultimately, there are a few tricky pieces of the Pirate101 puzzle. The most powerful tool we have with regard to Pirate101 seems not to be our voices, but our wallets. So we need to make sure, if this movement truly aims to revive the game, that it actively utilizes both of those tools in its efforts. 

Words are important. Expressing interest in Pirate101 story updates is important, but needs to be backed up by financially contributing to the game. The best way to do that is Pirate101 memberships. But we'll need more than that. We'd also need for KingsIsle to recognize this as a sustainable income source that can be updated, especially given that a merged MMO team would need to dedicate assets that could be building Wizard101 worlds to making Pirate101 content.

Ultimately, 2021 is the year to do it. KingsIsle's revenue this year will directly determine the additional earn-outs the company receives in this acquisition, and the success of each of the games in this critical transition period could determine a lot about their futures.

What do you think of the news?

Thanks for reading and see you in the Spiral!

No comments

Note: Only a member of this blog may post a comment.