Is the AR and VR market only for trillion dollar companies?

Hello and welcome back to Equity, a podcast about the business of startups, where we unpack the numbers and nuance behind the headlines. Every Monday, Grace and Alex scour the news and record notes on what’s going on to kick off the week.

As before, the Russian invasion of Ukraine was top of mind, but lots of other things were going on so we had more than plenty to yammer about:

So, yeah, it’s busy out there. Our live show is this Thursday, mind, and if you want to hang out with us while we record, head here to get a free ticket.

Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday at 6:00 a.m. PST, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.

Yahaha Studios, a platform for building no-code, immersive games, raised $50M in 3 rounds ahead of its launch this year

The success of Roblox and other user-created gaming experiences like Overwolf have democratized the concept of making games and have taken it into the mainstream. Now, a startup founded by veterans from Unity, Microsoft and EA that is building a new platform for creators to build immersive games, and related communities around like-minded people, is gearing up to launch later this year. Ahead of that, it is disclosing a healthy $50 million in funding.

Yahaha Studios, an Espoo, Finland-based startup with R&D based in Shanghai, has yet to launch a commercial product. But it describes what it is building as a no-code “metaverse for games”, where people can come together in communities to build and play games combing virtual and real-world elements.

The $50 million that it has raised, to be clear, is not new funding: it was pulled together in a period of six months, across three rounds, nearly two years ago, all in 2020.

The company tells me that “round 1” was led by 5Y Capital; “round 2” was led by HillHouse, and “round 3” was led by Coatue. Early investors participated in subsequent rounds, and other backers include ZhenFund, Bertelsmann Asia Investments, BiliBili and Xiaomi. The funding, we’ve confirmed, values Yahaha in the range of $300 million to $500 million (“few hundred millions” is the phrase that was used when we asked).

While Yahaha Studios may still be months from launch, in the meantime it has been quietly running a Discord community with a small group (around 220) of early users. The company tells me that an alpha version of the product will be launching in Q2 of this year. It is not planning to raise any more funding ahead of that, a spokesperson tells me.

“Metaverse” has very quickly become a very over-used word, and a number of companies claim to be blazing trails into this nebulous space, with its promises of combining augmented and virtual reality technologies to create entirely new kinds of digital experiences, gaming and otherwise. It looks like Yahaha has managed to stand apart from the crowd, and found investor attention early on, for a couple of reasons.

First of all, there are the company’s founders — Chris Zhu (CEO), Pengfei Zhang (COO) and Hao Min (CTO) — who all worked together as engineers at cross-platform gaming engine Unity, and have years of experience behind them.

Zhang has been living in Finland for the last 15 years, and this is how the company got started there, but that is not the only reason for basing Yahaha in Espoo: with companies like Supercell also originating in the Helsinki suburb, there is a strong ecosystem in the region for building teams and tapping into new gaming innovations.

The company has confirmed that the Yahaha platform was built in partnership with Unity, a link that in turn will help onboard more creators and more cross-platform gameplay and communities.

Second of all, there is the concept behind Yahaha itself, which focuses on two popular themes in tech at the moment: user-generated content and no-code development. UGC has been a popular part of online entertainment for decades at this point, but platforms like TikTok and Instagram have really given rise to a new focus on “creators”, people building huge audiences and businesses around the content that they are generating.

While platforms like Twitch and Discord have made celebrities out of game players, we haven’t really yet had much in the way of platforms that make it easy for creators to build massive communities around actual games (Roblox partly addresses this but doesn’t feel like a social platform). This is what Yahaha seems to hope to become, and if it works, it could be on to something very interesting.

Building the platform on a “no-code” framework, meanwhile, is what will help make Yahaha potentially used by more people. While a lot of the application of no-code has been in the area of enterprise IT (where people can, for example, easily build integrations between CRMs and accounting software), it’s interesting to see more of it making its way into consumer-focused services, specifically to serve creator communities.

“Achieving an investment of $50 million is incredibly exciting for us,” said CEO Chris Zhu in a statement. “Yahaha Studios has a key part to play in ushering in the next generation of entertainment as the metaverse continues to grow. Connecting users around the world through virtual entertainment, YAHAHA offers a unique creative and social experience to game developers and gamers alike. Through YAHAHA we are empowering creators at all levels, from established developers to those making their first game. Everyone can be a creator in our virtual world. We’re really looking forward to fully launching this year, growing our team and bringing the first stage of our vision for the future of content creation to life.”

SEC Form D filing reveals new $50M Sisu Game Ventures fund aimed at gaming startups

According to an SEC Form D filing, Sisu Game Ventures, a Pre-Seed and Seed fund which invests in gaming startups has raised a $50m first close of its new fund. However, the company declined to comment.

Paul Braigel of Sisu, which launched in 2014, did however comment that the firm had made several investments over the summer, including in a Zynga founder’s new venture. Sisu team members have been involved as entrepreneurs, operators and investors in companies like Remedy, Unity, Disney, Niantic, Funcom and EA. 

The fund has so far made 14 investments. Half in existing portfolio companies, such as in Resolution Games and Lightheart Entertainment, and the rest in new additions, including Theorycraft Games, Playco, and Core Loop.

Braigel said the Sisu fund III investor base is almost exclusively from the games industry, including global studios like Supercell, platform holders and publishers like Sony and Ubisoft, as well as individual founders of studios.

Bragiel said: “A number of founders from the Sisu family have gone on to start multiple successful ventures and these are the kind of founders we love to support. Our goal is that if we invest in a founder once, we hope to back all future companies they start”.

Sisu says it invests before a product is ready and metrics are there, it also works with individual founders in a ‘studio builder’ format.

Recent examples of this include Lightheart Entertainment with their first game Mr. Autofire, as well as Mainframe Industries with their yet unannounced cloud-native MMO.

So far the fund has had 8 exits, including Small Giant Games acquisition by Zynga for 700m, but also King acquiring Hatrabbit, Helsinki Gameworks acquisition by Next Games and Flaregames acquisition of Kopla Games.

EA to acquire Codemasters for $1.2 billion

Everybody thought the deal was done — Take-Two was supposed to acquire Codemasters for nearly $1 billion. Take-Two even reached an agreement with the board of Codemasters. But Electronic Arts crashed the party at the last minute and offered even more money. EA now plans to buy Codemasters for $1.2 billion.

Sky News originally reported that EA was planning a knockout bid. Since then, EA has officially announced that it has reached an agreement with the board of Codemasters.

If you’re not familiar with Codemasters, the British game studio has been around since 1986, making it one of the oldest game studio still operating today. It has developed and published dozens of games. In recent years, the company has been focused on racing games across multiple franchises, such as Dirt, Dirt Rally, Formula One, Grid and (of course) Micro Machines.

EA is offering to buy Codemasters for £6.04 per share ($7.98) in an all-cash deal. The acquisition is expected to close during the first quarter of 2021.

EA has had a tumultuous relationship with racing games. It has created the Need for Speed franchise, which is one of the most popular racing franchises. But is has also neglected racing games in recent years, which led to disappointing games.

Similarly, EA has acquired Criterion Games in 2004 — the game studio behind Burnout games. But Criterion Games now mostly work as a secondary studio on Battlefield and Star Wars Battlefront games.

Codemasters will be able to take advantage of EA’s distribution resources, including EA Play, EA’s subscription service. It positions EA Play as an interesting subscription if you care about racing games.

Take-Two probably didn’t expect to lose the deal, but the company is going to be fine. Take-Two owns Rockstar Games (GTA, Red Dead), Firaxis Games (Xcom, Civilization), 2K Sports (NBA 2K) and a lot of other studios.

2020 has been an important year of video game consolidation. Microsoft has been leading this trend with the acquisition of ZeniMax Media, the parent company of Bethesda, id Software and Arkane. Microsoft also acquired Double Fine Productions, Obsidian Entertainment and Ninja Theory in the past couple of years.

Xbox Game Pass Ultimate subscribers will get EA Play on November 10th

Earlier this month, Microsoft announced that Xbox Game Pass Ultimate subscribers would be able to access EA Play for no additional cost. The company shared more details about the rollout. Console players will be able to activate their complimentary EA Play subscription on November 10th.

Microsoft is also launching the Xbox Series X and Xbox Series S on November 10th. As a reminder, EA Play includes back-catalog games from EA, such as Fifa 20, Madden NFL 20, Battlefield V, Mass Effect games, Dead Space games, etc.

The Xbox Game Pass Ultimate subscription include access to Microsoft’s library of games, an Xbox Live Gold subscription, Microsoft’s cloud gaming service xCloud and soon EA Play. It costs $14.99 per month. If you just subscribe to the Xbox Game Pass for $9.99 per month, you won’t get EA Play.

On Windows, Xbox Game Pass (and Xbox Game Pass Ultimate) subscribers will able to download EA games in December. Unfortunately, you’ll have to create an EA account, download the EA client and link your Xbox and EA accounts.

If you’re already paying for EA Play and an Xbox Game Pass Ultimate subscription that grants you access to EA Play, your EA Play subscription will be canceled and your remaining time will be converted to Xbox Game Pass Ultimate. If you had between 50 days and 3 months left, you’ll receive one month of Xbox Game Pass Ultimate. If you had between 4 and 6 months remaining, you’ll receive 2 months of Xbox Game Pass Ultimate. You can get more details in the FAQ.

Microsoft is using this opportunity to confirm that some Bethesda games will be added to its subscription service. Doom Eternal is coming on October 1 for instance.

EA games on PS4 and Xbox One could be ‘upgraded free’ to next-gen console versions

2020 and 2021 will be one of the periodic transitional eras in gaming as Sony and Microsoft debut their shiny new consoles, the PlayStation 5 and Xbox Series X. To ease the process (and spur adoption of the next generation), EA may make its upcoming titles free to “upgrade” to your chosen console.

On an earnings call last night, COO Blake Jorgensen at the end of his remarks noted a possible effect on revenue “from the games we are launching for the current generation of consoles that can also be upgraded free for the next generation.”

EA declined to comment on the comment, but the meaning seems obvious enough. It likely refers to “cross-gen” games that will appear on both existing consoles and those set to debut later in the year. If you buy the next, say, Battlefield game on PlayStation 4, you will have the option to transfer it somehow to the PlayStation 5.

Exactly how this would work is not clear — there will almost certainly be some rigmarole involving deactivating the license on your old copy — but the effect is a positive and consumer-friendly one. People can buy a game, from EA anyway, safe in the knowledge that they can continue to play it even if they buy a new console. That hasn’t been the case in general before.

In fact the whole transition is looking to be a relatively easy one: The new consoles will be backward-compatible with many games from the previous generation; Services like online access and monthly free games will cross over; Some hardware and accessories will be shared; Built-in streaming options mean improved portability.

EA’s apparent commitment to cross-gen upgrades is among the first, though some publishers and developers have floated the idea or declared support for it, pending approval from the console makers themselves. The confirmation could trigger an avalanche of announcements as others hurry to assure gamers that they, too, will provide this option.

Sony and Microsoft are the ones left holding the bag here: While a sale is a sale for EA or Ubisoft, the console makers are under tremendous pressure to show their console launches are successful. (Nintendo, as usual, is pursuing its own agenda independent from the cadence of its rivals.)

Part of that strategy is high profile next-gen exclusives that people save up to buy alongside the new consoles, providing revenue spikes and platform lock-ins. When a large amount of those sales occur earlier in the year, and technically for the previous consoles, it’s not a good look.

These policies have a way of evolving right up to and beyond the moment of release. Sony clowned so devastatingly on Microsoft’s confusing and limited game transfer policies at E3 2013, the outset of this console generation, that it affected the whole zeitgeist, boosting PS4 sales and forcing Microsoft to reconsider. (You can see me in the video of it; I’ve rarely heard a crowd so excited about something.)

It’s better to err on the side of liberality, it turns out. EA, which has routinely erred on in the other direction over the last few years, hopes perhaps to curry favor in advance of a gaming market opening up in new directions. We’ll see if other companies follow suit.

BioWare’s ambitious Anthem is off to a rough start as players bring servers to their knees

The gaming world is excited to play Anthem, BioWare’s answer to Destiny and other big-budget online shooters — but an exclusive preview weekend for the mech-flying game has struggled to get off the ground. Of course, it wouldn’t be a game launch these days without a few hiccups to spice things up, but it is a little embarrassing.

The 40-gigabyte demo was made available today to those who had pre-ordered the game, as well as press and other “VIPs.” The game, announced last year at E3, is a loot-focused shooter where you pilot mechs through a huge open world, engage in cooperative combat and exploration and all that.

At least, so they say. Reports immediately came flooding in on forums and social media that not only was Origin, the service on which the demo is offered, failing to function properly, but that the game itself wasn’t connecting to servers, or if it did, wouldn’t load beyond the intro sequence.

I encountered this myself; after eventually getting loaded and logged in, I managed to get into the starting town area where you will, in the full game, upgrade your gear, accept quests and so on. But when I attempted to launch the first mission or otherwise enter the actual game world, the loading bar would stop about 95 percent of the way done and stay there forever (I waited about five minutes and reloaded a couple times to make sure it wasn’t just my aging rig). Those who made it all the way in complained of lag and glitches.

No one really ever expects a major title, especially one with a major online components, to launch even in a limited way without a few speed bumps, but something like this can really put the brakes on a hype train. Publisher EA admitted to the laundry list of issues from a support Twitter account:

Funnily enough EA Help’s own servers were having trouble as well, so not only could people not play Anthem, they couldn’t report that they couldn’t play Anthem.

Patience is a necessary virtue in today’s AAA game launches, but the people hoping to play this weekend aren’t randos but paying customers; this preview demo weekend was supposed to be a pre-order bonus, but the first day is a bust so far. Considering BioWare and EA knew exactly how many players could be trying to connect today — and those numbers are likely far less than those who will try the open beta or connect on launch day — it’s rather odd that they were seemingly caught so off-guard.

Anthem is certainly promising and the developers have gone out of their way to assure players that many of the hated practices of online games these days would not find a home on their platform. But launch problems always jar the confidence of undecided buyers, and there’s almost no question that the game will be better a month or two after its actual debut. Launch numbers could be affected by players not believing the game is ready to play, and therefore not being willing to pay.

I fully anticipate these issues getting resolved at some point soon, however, and will collect my impressions of the game in a separate post when that happens.

The Sims gets its own in-game Alexa-style assistant, Lin-Z

There’s nothing like The Sims to log off from reality for a bit. Getting away from the increasingly ubiquitous world of smart assistants, on the other hand, is a different matter entirely. EA announced this week that the perennial favorite life simulation series is getting its very own smart assistant.

Lin-Z is a lot like an in-game version of Alexa — or, for that matter, Google Assistant or Siri or Bixby or Cortana, et al. Accessed via a smart speaker with a familiar glowing green diamond, the assistant can play music, do trivia, tell jokes, turns lights on and off (smart home!) and order different services, like food, gardening and repair.

That feature is available this week in The Sims 4 for PC and Mac. Fittingly, the real Alexa is also getting a bunch of Sims-related skills, including trivia and the ability to play songs from the game’s soundtrack. That one’s available for users in Australia, Canada, India, the US and UK, for those looking to further blur the lines of reality.

Here’s what EA announced at E3 2018

Good afternoon, downtown L.A.! The sun is shining, the birds are singing and the giant banners with gun toting cyborgs have been unveiled.

That can only mean one thing: it’s time for E3! Electronic Arts kicked the show off this morning with the first official press conference, and the big news was, as anticipated, Battlefield V.

Battlefield V

The World War II title will likely get a little more love at the Xbox press conference tomorrow morning, but we did get a look at some compelling gameplay. Notably, the title is getting a Fortnite-style multiplayer, battle royale mode.


Bioware’s next title isn’t due out until next February, but Anthem still managed to get a lot of love today at E3. The multiplayer shooter finds players assuming the role of mech suit wearing “Freelancers.”


Due out September 28, EA’s big soccer (or football or whatever) title is adding UEFA Champions League gameplay, after picking up the license from Konami. That’s big news for European soccer fans, bringing the annual tournament to the title. The company also announced a free trial for Xbox, Playstation and PC players.

Madden NFL 19

The popular football title (the other football) is destined for the PC for the first time in more than 10 years. It will bring with it new, more lifelike player animation when it debuts August 10.

Star Wars: Jedi Fallen Order

It wouldn’t be an EA E3 event without some Star Wars love. Due out during the 2019 holiday season, the title will offer a dark take on the familiar universe, allowing users to play as a Jedi. That’s all we know so far, and sadly, there’s no trailer yet to speak of.

Unravel 2

No waiting on this one, however. The yarn of a puzzle platformer sequel just dropped today for the PC, PlayStation 4 and Xbox One.