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Business January 2, 2023

China Softens Up on Foreign Video Games Licensing

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China Softens Up on Foreign Video Games Licensing

The video games regulator in China has given a nod for release of 44 foreign video games as the country’s tough stance on the gaming industry starts to thaw. Since August 2021, China has been rigid on the gaming industry.

The latest development will see 44 foreign games including 7 from South Korea released in the country. The approval for importation of games marks the end to China’s crackdown on the industry.

According to a separate list released last Wednesday, the regulator also approved 84 domestic games for December.

Among the imported games approved by the National Press and Publication Administration are 5, which will be published by Tencent Holdings, including Pokémon Unite by Nintendo and Valorant by Riot Games, according to the regulator’s list.

Following announcement by Chinese gaming industry regulator on the licensing, South Korean gaming stocks including Netmarble Corp, NCSOFT, Krafton, Kakao Games and Devsisters, rose by 2% to 17%.

Also read: Singapore Facing Shortage of Talent for ‘Phygital’ Metaverse

China Softens Up on Foreign Video Games Licensing

China and its tough stance on video games

During a year end meeting, Tencent founder Pony Ma said the company has to get used to the country’s tight licensing landscape, adding the number of new games that China approves will remain limited in the long run.

Unlike in other countries, video games need license from regulators before their release in China.

Its tough stance on gaming industry had a knock on effect on tech companies like Tencent and NetEase Inc that derive a significant chunk of revenue from publishing self-developed games as well as imported ones.

Since August 2021, China went after the country’s tech giants, which are among the world’s top gaming industry players with some estimated annual sales of $44 billion.

The crackdown on the industry is believed to have wiped more than $1 trillion off the value of the Chinese tech companies.

The South China Post reported that the crackdown also resulted in about 14 000 gaming related companies and studios going out of business.

Among the allegations levelled against the tech companies were abuse of monopolistic power and misuse of data.

Chinese authorities also argued the rules were to “effectively protect the physical and mental health of minors” while children under the age of 18 would be allowed to play online games between 8pm and 9pm.

China Softens Up on Foreign Video Games Licensing

Authorities soften up on the industry

In April last year, regulators started issuing licenses to homegrown games and approval of foreign games was seen as the last hurdle to be removed.

The world’s largest gaming company – Tencent was granted a total of 6 licenses according to sources with knowledge who spoke to Reuters.

Tencent received its first commercial license in November last year since August 2021 when the country got tough on the gaming industry.

Other imported games that were approved include CD Projekt’s CDR.WA “Gwent: The Witcher Card Game” and Klei Entertainment’s “Don’t Starve.”

Apart from Tencent, NetEase, ByteDance, XD Inc and iDreamSky also received game approvals in December. Shares of these companies – excluding NetEase – have recorded gains of between 0.8% and 5.2% in Hong Kong while Japan’s Nintendo rose 0.2%.

Big business

In 2021, China approved 76 imported games compared to 456 approved in 2017.China is referred to as the capital of gaming industry accounting for 25% of the global video game industry.

According to INTENTADIGITAL, gamers in China spend more time playing video games compared to any other activity.

There are over 685 million gamers in China, which is almost half its population.

At least 80% of gamers watch live streamlining while 70% of gamers play esports. Of the gamers, 48% are female.

In 2021, Chinese video game revenue was estimated to be around $46 billion, which was a slowdown from 2020 after authorities imposed strict play limits for under 18s and froze game license approvals.

On a global scale, the gaming industry is projected to continue growing towards 2025 with nearly 3.2 billion people estimated to have played games in 2022 alone, spending about $196.8 billion according to a global games market report.

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Image credits: Shutterstock, CC images, Midjourney, Unsplash.

Business

Twitter Now Worth Only a Third of Musk’s $44B Purchase Price

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Twitter Worth Only a Third of Musk’s $44B Purchase Price

It’s been almost seven months since Elon Musk acquired Twitter for $44 billion but the tech entrepreneur has failed to invigorate the company’s fortunes. Financial services corporation Fidelity now estimate the value of the app to stand at just 33% of Musk’s purchase price.

Musk completed his famous takeover of the microblogging site in October, fulfilling his long-term desire to be the boss of Twitter.

The tech billionaire was criticized for overspending on Twitter during the acquisition. Musk paid $44 billion for Twitter, with $33.5 billion in equity. However, Musk has also acknowledged he overpaid and said it was only worth half of what he paid.

“Myself and the other investors are obviously overpaying for Twitter right now. The long term potential for Twitter in my view is an order of magnitude greater than its current value,” said Musk.

Twitter was valued at $20 billion in March by Musk himself in an email that was sent to the company’s employees.

Twitter struggles under Musk

Following Musk’s takeover, many corporations and companies cut ties with the platform. Musk’s erratic decision-making and management style is blamed on driving a host of advertisers away.

Ford, General Motors, Volkswagen, General Mills, Mondelez, Pfizer, and United Airlines are among the major corporations that paused or pulled their advertisements from Twitter due to concerns regarding hate speech and conspiracy theories.

International ad and consulting firm Interpublic, which represents American Express, Coca-Cola, Fitbit, Spotify, and dozens of other major corporations, has also stopped advertising on the platform. That cut caused Twitter to lose $24 billion. Given the recent advertiser exodus it is unsurprising that Fidelity downgraded Twitter’s value – but it remains unclear exactly how they arrived at a final valuation.

In November, Fidelity initially decreased the value of its Twitter stake to 44% of the purchase price. This was followed by subsequent markdowns in December and February.

“In 2021, Twitter generated more than 4.5 billion U.S. dollars in advertising service revenues, up from 3.2 billion U.S. dollars in the previous year,” according to Statista.

Also Read: Six Months of Twitter Under the Rule of Elon Musk

Additionally, the micro-blogging platform produced around $571 million in data licensing revenue, up from $508 million 2020.

Insider Intelligence projected “that Twitter’s 2023 ad revenues would reach $4.74 billion worldwide.” However, since Musk took charge, the market research company has cut its projection by “nearly $2 billion, to just $2.98 billion, as the app grapples with brand safety issues, confusing policies, and broken technology.”

Twitter Blue: a flop card

Twitter Blue, a subscription-based verification checkmark with various features, remains one of the most popular changes in Musk’s brief tenure.

In November, the Tesla chief introduced a feature called “Blue for $8/month,” which brought a drastic change to Twitter’s policy by providing a verification checkmark known as a Blue tick.

This feature also offers additional benefits such as the ability to edit tweets, half-ads, longer tweets, text formatting, bookmark folders, NFT profile pictures, etc.

Interestingly, though, the change has been copied by Facebook and Instagram owner Meta, whose subscription service Meta Verified lets users add a blue checkmark to their accounts.

Musk faced accusations of charging its users to cover his $44 billion, which he invested to become the boss. Despite the criticism for removing legacy checkmarks from popular accounts, Twitter Blue generated $11 million on mobile in its first three months as a new product.

The amount it has generated is slightly lower than expected, as Twitter has 368 million monthly active users worldwide.

However, Twitter is adding more features to the paid verification badge as Musk tries to develop it as a flagship product under the Twitter umbrella.

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AI

Baidu Is Rolling Out a $145M Venture Capital AI Fund

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Baidu is Rolling Out a $145M Venture Capital AI Fund

Chinese tech giant Baidu is setting up a venture capital fund of $145 million or 1 billion yuan to back AI-focused startups. Baidu co-founder and CEO Robin Li announced the launch of the fund at a JP Morgan summit in China this week.

The move could signal China’s push towards self-reliance in the cut-throat generative AI sector. The fund will support the development and innovation of AI-based content creation, such as chatbots, video and audio synthesis, and natural language processing.

The fund is targeting early-stage AI applications, an area which Chinese generative AI startups have so far struggled to reach widespread adoption.

Also read: AI Code of Conduct Coming ‘Within Weeks’ Says US and Europe

Tailing the US’s OpenAI

OpenAI recently created an investment fund valued at more than $175 million, according to a Securities and Exchange Commission filing. the company has been investing in startups, with its OpenAI Startup Fund to back companies “pushing the boundaries of how powerful AI can positively impact the world.”

Baidu is also planning to launch competition for developers to build applications using its Ernie large language model (LLM) or integrate the model into their existing products, in a similar fashion other tech firms are using OpenAI’s ChatGPT technology.

Ernie bot is Baidu’s own AI-powered LLM that can generate natural and coherent texts based on user inputs.

“American developers are building new applications based on ChatGPT or other language models. In China, there will be an increasing number of developers building AI applications using Ernie as their foundation,” said Li.

Baidu unveiled the chatbot in March this year and claimed that it outperformed other LLMs in several benchmarks.

Battle for AI supremacy

The success of ChatGPT has put Chinese tech companies under pressure to fast-track the release of their own LLMs and bring them to market.

According to Reuters there are over 75 Chinese companies that have already released their own LLMs since 2020. Baidu and e-commerce giant Alibaba are among these companies.

A report by a state-run research firm says over 79 LLMs have been launched in the past 3 years.

And the Baidu boss predicts that in the generative AI age, Chinese companies will catch up, and even lead the way in discovering commercial applications for AI.

“I am very bullish on China AI development. Over the past few decades, China has warmly embraced new technologies,” said Li.

“Even though we didn’t invent Android, iOS or Windows, we developed a host of very innovative applications like WeChat, Douyin and Didi. Many of them are popular and useful. The same trend is playing out in the AI age. Technology ushers in a myriad of possibilities and we are good at capturing them to build applications,” explained Li.

LLMs, a vital tech

Since they can produce realistic and varied material across a range of subjects and forms, LLMs are seen as a vital technology for expanding AI applications and services. They do, however, also present ethical and legal difficulties, such as possible abuse, plagiarism, and bias. China released draft regulations on the use of generative AI in April in response to the spike in LLMs, requiring developers to acquire approval and explicitly label such products.

The growth and adoption of AI-based content production in China and elsewhere are anticipated to be accelerated by Baidu’s venture capital fund and competition.

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Business

Metaverse Gaming Market Expected to Reach $119.2 Billion by 2028

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Metaverse Gaming Market Expected to Reach $119.2 Billion by 2028

The metaverse gaming market is estimated to encompass $22.7 billion in 2023 and projected to reach $119.2 billion by 2028, according to a recent report from ReportLinker.

The metaverse has been a hot cake in the tech industry in recent years and was boosted by Mark Zuckerberg’s decision to change Facebook’s name to Meta. However, the market has been limping towards AI, which stole the spotlight from virtual reality.

“The global metaverse in gaming market size is estimated at USD 22.7 billion in 2023 and is projected to reach USD 119.2 billion by 2028 at a Compound Annual Growth Rate (CAGR) of 39.3%,” stated the report.

The growth of the metaverse in the gaming market is expected to be fuelled by several significant factors, including the dynamic and evolving landscape of adjacent technology markets “such as extended reality (XR),” which encompasses “virtual reality (VR),” augmented reality (AR), and mixed reality (MR).

Expectation of rapid growth

In 2021, the gaming industry experienced rapid growth, with billions of people playing video games globally and generating over $193 billion in revenue.

Gaming companies quickly became early adopters in exploring the potential of the metaverse. Looking ahead to 2023, it was projected that the metaverse will continue to reshape the gaming landscape.

A survey from last year shows that about 52% of U.S. gamers believe the metaverse will change the game industry.

“According to the survey, just over half (52%) of gamers believe the metaverse will change the video game industry and a plurality (41%) think that the metaverse will have a positive impact on the industry (vs. 25% who disagree),” reads the survey report of Globant and polling firm YouGov.

Moreover, 40% say the buzz around “metaverse gaming is warranted,” though nearly “one-third (30%) were undecided” on that subject.

Who are the big players?

The metaverse is not just a single platform, virtual experience, or game; it is an entire world recreated to provide an immersive experience. Gaming is one of the many experiences in the metaverse that is powered by AI, VR, and AR.

Whenever it comes to gaming, some of the giant games like Fornite, Unreal, and Roblox come to mind.

Read Also: Meta Seeks to Boost Its Metaverse Gaming Credentials

And those are expected to be significant players in the metaverse due to their existing influence and capabilities in the gaming industry, as a report from 2022 states.

“As gaming platforms like Fortnight gain functionality and evolve into technologically advanced social meeting places, it becomes more likely that a functioning Metaverse, with an independent economy, systems, and processes is in our future,” reads the report.

Fortnite has transformed into a social meeting place, offering interactive events and branded experiences.

Unreal’s powerful engine enables immersive media experiences, while Roblox’s user-generated content and virtual currency have attracted millions of users. These factors position them to thrive in the evolving metaverse landscape.

Europe expecting significant growth

Europe is expected to witness significant growth in the gaming metaverse market, with the second-highest CAGR during the calculation period.

The UK, Germany, and France lead the way in technology investment, while Russia and Spain are also adopting new display technologies.

“The substantial growth of the virtual world immersive interactive gaming industry in Europe is a crucial driver for the gaming metaverse market in this region,” stated the report.

The immersive interactive gaming industry in Europe, along with the demand for AR, VR, and MR technologies in the entertainment sector, serves as a driving force, indicated ReportLinker.

Initiatives such as the European Association for Virtual Reality and Augmented Reality (EuroVR) and projects like Augmented Heritage and International Augmented Med (I AM) contribute to market growth.

With increasing startups in extended reality, particularly in Sweden, Europe is poised for increased growth in the gaming metaverse markets.

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