What We Got Right, And Wrong, About 2022

When we launched The Jacob Wolf Report, I made five key predictions for the rest of the year. So let’s take a look and see how they turned out.

It’s 2023! Happy New Year, everyone! I’m back from some much-needed time off and given it’s the beginning of the year, I feel it’s best for some accountability. No, not New Year’s resolutions. But rather, looking back on our predictions for 2022.

If you weren’t subscribed last spring, when we launched The Jacob Wolf Report, I made five key predictions for the rest of 2022. Some were wrong, some were right—that’s the fun in predictions. So without further ado, let’s take a look and assess how I did.

Prediction No. 1: More Consolidation, Acquisitions and Public Offerings

Verdict? Right.

Ding, ding! This one was so apparently obvious. The trend started in early 2022 with Microsoft proposing to acquire Activision Blizzard (a deal which now might not go through), then the merger of Zynga and Take-Two Interactive.

But it continued well on into 2022. A few weeks after my predictions piece, Embracer Group—backed by the Saudis—went on a spending spree, acquiring the rights to a ton of Square Enix IP for $300 million and later the video game rights to “The Lord of the Rings” franchise.

Then Chinese megacorp NetEase bought Quantic Dream, the developers of “Detroit: Become Human”, and Nordisk Games acquired Supermassive Games, too.

The acquisitions will keep coming in 2023, too. With an economic downturn in swing already, access to private equity and venture capital or debt funding is drying up. That means finding capital-rich organizations—like Microsoft, Embracer and NetEase—to bankroll their competitors.

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Prediction No. 2: “Esports” Will Be Redefined

Verdict? Right.

If you read the original prediction, my take basically centered on “esports” losing its current meaning: competitive video gaming. The industry has had a tough year, as expected, and nearly every business built around video games-as-a-sport is failing, save maybe a few. Teams are having to tighten belts, media companies are dropping like flies and investor confidence that esports is the next big thing—as once promised by the executives who benefitted from that narrative—is at an all-time low.

Take this quote from Misfits Gaming CEO Ben Spoont in The New York Times in November:

“They certainly pitched us that the growth of these leagues would be meteoric, and we all drank the Kool-Aid. What has happened is that growth has not materialized as fast as we had hoped.”

Spoont’s referring to the Activision Blizzard and Riot Games leagues, specifically the League European Championship (which his team has since mostly exited), the Overwatch League and Call of Duty League. He’s saying the quiet part out loud, something most of his peers would not say to a member of the media. But it’s ringing incredibly true.

To be an esports org in 2023 no longer means just having a set of competitive teams surrounded by support staff, marketing, sales and content. No, no, no. It’s more like Misfits, who have a dozen creators like QTCinderella, Hikaru and Tubbo on their lineups; or like 100 Thieves, who this year announced it’s making a video game and launched an energy drink brand (the organization also already owns a computer peripheral manufacturer, Higround). Not to mention TSM—which continue to double down on its tech like the Blitz App and Dyno—or Team Liquid, which continues to push into the content production space.

The need for an esports team in the creator business is also dwindling. Previously, esports teams had preferential deals with platforms like Twitch. This is why, for the longest time, creators like Ninja remained with an esports team (Luminosity) long after he became the most famous Internet creator in the world. Hell, even xQc is still signed with that exact team.

But as agencies—like MrBeast’s representation Night Media, Pokimane’s RTS and MoistCr1TiKaL’s Mana Talent—and content groups—such as OTK and OfflineTV—start to spin up more and more, the need for that middleman is going away.

Interestingly, Misfits just raised $20 million to start a creator fund to essentially bankroll creator aspirations, Hollywood style. That might be an answer to the fading relevance of most esports teams, but the jury’s out on whether the economics support those kind of ventures.

All said, “esports” isn’t as pure as some may have hoped. The word is redefined and it now, to many, encapsulates creators, gaming entertainment and technology.

Prediction No. 3: Play to Earn Will Become the Hot Commodity for Investment

Verdict? Wrong.

I mean who really could predict how abysmal and toxic cryptocurrency would become at the tail end of 2022?

I was dead wrong with this. Between the Terra crash, then the subsequent hit both Bitcoin and Ethereum took, the “crypto winter” began in 2022. Like the esports winter, it’s for the better. The people looking to get rich quick will buzz off and left behind will be people who are genuinely interested in making meaningful businesses.

I’d argue we’ve still not seen a “good” (read: subjectively good) cryptocurrency game to date. For most of them, even Axie Infinity, crypto is the gimmick, not a utility, and players playing these games do not play for any reason other than making money.

Investment in the Web3 space has also crashed. In November, when it became apparent how much money cryptocurrency exchange FTX’s founder Sam Bankman-Fried allegedly stole from his company and its customers, crypto might as well have become the Titanic. It’s sinking. The only people saying otherwise are the ones incentivized to tell you, “This is fine.”

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Prediction No. 4: Games IP Will Become a Hotter Commodity for Film and TV

Verdict? Right.

Spot on with this one. It’s never been a better time to be a gaming executive with valuable IP. It’s not like we hadn’t seen video game movies before — remember the 2016 “Warcraft” movie or the 2005 “Doom” movie? Both were failures in the U.S. box office. But coming off a successful 2021 (thanks, “Arcane”), it has become clear that gaming storytelling can be brought to the big screen.

Some of these projects coming in 2023 were already in development, such as “The Last of Us” HBO series, which releases in a couple of weeks, or “The Super Mario Bros. Movie,” which comes out in April.

But there were also a lot more orders, too.

In August 2022, Netflix announced it had ordered a film based on the “BioShock” franchise. “Cobra Kai” creators Josh Heald, Jon Hurwitz and Hayden Schlossberg are set to helm a series based off “Duke Nukem” in collaboration with Legendary Entertainment. “Gears of War” is coming to Netflix, too—with both an animated series and a live-action film. “Stranger Things” and “Black Widow” star David Harbour was named the lead for a “Gran Turismo” film.

There’s much more coming, too—like new film & TV IP based on “Metal Gear Solid,” “Minecraft,” etc.

Speculating, but I believe a part of this is because a lot of the current intellectual property on streaming platforms is not catching on with Gen Z and Gen Alpha. Those generations have other entertainment grabbing their attention—video games, of course, but also TikTok and shortform video. The series that have been successful among Zoomers are ones that go social media viral, such as “Wednesday” and “Stranger Things” on Netflix this past year (both of which got a lot of TikTok love).

So it makes natural sense as streaming platforms vie for audience that they’d tap in so deeply to story-rich, video game IP.

The line between gaming storytelling and traditional TV and film writing is blurring, and I’m all here for it. I doubt all of these films and series will pan out or be box office hits, but I’m surely excited for the ones that do.

Prediction No. 5: Esports Player Salaries Will Correct

Verdict? Right.

This is right, but showing you the numbers is a bit tough.

I’ve done a lot of reporting behind the scenes and let me tell you, the deals I referenced beforehand—$6 million over two years for former TSM support SwordArt, or similar for former Cloud9 mid laner PerkZ—do not exist anymore.

This is another not-well-covered issue. Frankly, I don’t see it as much of an “issue” personally, but it does not behoove esports teams or players to talk about pay cuts. What we have seen is a culling across a lot of esports teams in game titles that aren’t franchised or ones that don’t have some direct economic benefit.

But even in the top leagues, like the LCS, Overwatch League and Call of Duty League, I’ve heard nothing but slashed salaries in almost all instances, even for top players. Now in “League of Legends” in particular, we’re still seeing some seven-figure deals, but the amount of them—and the willingness to offer them—has certainly reduced.

If you’re an esports team executive reading this and you’re willing to talk about this without all the bullshit, let’s chat!