Trending Assets
Top investors this month
Trending Assets
Top investors this month
$70.4MFollowers
Skillz ($SKLZ) Breakdown
Gaming is eclipsing the entertainment industry and surpassing traditional streaming services. Within this $161 billion market, the fastest growing segment is mobile gaming. Today we will breakdown, Skillz ($SKLZ). The company that is aiming to tap into the competitive nature of gamers and transform the future of electronic gaming.
📖What is Skillz?
Skillz provides a platform for users to socially compete and watch multi-player esports games.
The company empowers developers to share their creations and for gamers to compete. The company is creating an gaming ecosystem that fuels the “competition layer of the internet”.
The company offers three types of games:
- Gamers can play the exact game at different times and then scores are compared
- Gamers can play a multi-player game where they take turns (like chess) and then a winner is determined at the end
- Gamers can play live making moves simultaneously between each other and then a winner is determined at the end
Now top games on the platform alternate year by year. In 2020, the top three games were Solitaire Club, 21 Blitz, and Blackout Bingo.
The three key values the company continues to reiterate are trust, fairness, and competition when building their ecosystem.
If you want to read the full breakdown, click here ➡️Skillz Breakdown Substack
📈Market Opportunity
According to Statista, over half the world’s population uses smart phones and based on additional studies around 33% of app downloads are games and within those games users allocate 10% of their time. Newzoo highlights, that the global games market has expanded from $70B in 2012 to $80B in 2021. Within the market the fastest growing segment is mobile gaming at a CAGR of 27% from $12B in 2012 to $106B in 2021.
Majority of gamers are usually young adults with a median age of 29 years old. According to the Entertainment Software Association, 64% of American adults played video games in 2020. Now when it comes to Esports, the competition sparks an immense amount of passion and engagement from fans. Millions of fans will want to watch their favorite performers and are also more willing to consume and spend on content.
In this market, there is a high demand for content with an engaged and passionate user base. Over the years, content creation in the gaming industry has democratized with standardized game development and distribution platforms (Unity and Unreal) resulting in over 15 million game developers making content.
🤯Key Insights for Time Investors:
- Mobile gaming is taking over and in 2020 accounts for 51% of total gaming revenue. Based on trends presented from Will Hershey of Roundhill Investments, more people are watch gaming and Esports than Netflix, HBO, Hulu, and ESPN combined.
- Mobile gaming is taking over and in 2020 accounts for 51% of total gaming revenue. Based on trends presented from Will Hershey of Roundhill Investments, more people are watch gaming and Esports than Netflix, HBO, Hulu, and ESPN combined.
- Now let’s look at an investor’s perspective on gaming. Blake Robbins, Partner at Ludlow Ventures, was interviewed in Invest Like the Best about investing in gaming and highlighted an interesting concept about a platform that would be the “Webflow for games look alike”. This would empower creators to design games without friction spawning some top hits. Additionally, you are now able to build multiple games a year and when you have one game that is successful you can funnel that growth to other games creating a sustainable game publishing platform. This is interesting as Skillz has accomplished something similar in nature.
- Now let’s look at an investor’s perspective on gaming. Blake Robbins, Partner at Ludlow Ventures, was interviewed in Invest Like the Best about investing in gaming and highlighted an interesting concept about a platform that would be the “Webflow for games look alike”. This would empower creators to design games without friction spawning some top hits. Additionally, you are now able to build multiple games a year and when you have one game that is successful you can funnel that growth to other games creating a sustainable game publishing platform. This is interesting as Skillz has accomplished something similar in nature.
- Their platform enables developers to learn, grow, and share success through analytics while allowing users to connect, and experience a frictionless community that allows for competition.
- To ensure great content the company monitors metrics such as the player liquidity inside each game based on number of daily active users, the stability of each game based on crash rates, the user satisfaction based on app store ratings, and user issues based on support tickets. The company wants to provide fair competition, network exposure, and financial success.
- On the flip side, Wolfpack research has highlighted that there are some huge risks to Skillz. They have stated that the company’s growth projections can not be sustained when majority of the revenue is generated by three games. They have also denounced the NFL partnership that the company highlighted during its SPAC merger.
- Wolfpack research has also highlighted that in-app purchases have declined and they have spoken with the third-party developers of those games to confirm the contraction. Essentially, they are claiming a shark fin effect. The research firm also highlighted poor leadership performance questioning the “serial entrepreneur” label of the CEO and the quality of the work environment.
- Now, the company addressed their concerns from the short reports during their earnings call and with the continued performance they believe they are on track in building an ecosystem greater than mobile gaming, according to the CEO. He quoted "We started with mobile gaming, but we think about the world as digital competition, and this is about building out the future of digital competition."
While these reports have certainly introduced a new perspective, top tier investors/institutions continue to add a vote of confidence for the company:
- Cathie Wood – ARK Invest: +18M shares - $288M
- Atlas Ventures - $372M
- Wildcat Capital Management - $344M
- Morgan Stanley Investment Management - $322M
The Vanguard Group - $309M
equitybreakdown.substack.com
Skillz ($SKLZ) Breakdown
"The Future of Digital Competition"
Already have an account?