Axion Ventures (TSXV:AXV)(OTC:AXNVF) already had an enviable foot in the door of the $113-billion-dollar global gaming industry…and they are getting very close to gain full access to its biggest market!
How hot and huge is the global EGAMING INDUSTRY? Well, it grew 12.8% in 2018 to hit a record $113.4 billion[1].
That’s over 15% larger than global revenue that year from movies ($41.7 billion)[2] AND home entertainment ($55.7 billion)[3] combined!
No wonder financial reporter Chris Parry – who first picked up on the rising popularity of pot investing – now says Egaming is what marijuana was back in 2015. And no wonder celebrities like Drake and Michael Jordan are investing in this hot and huge market.
And what’s the hottest and biggest gaming market of all? CHINA! With 440 million+ gamers and an estimate 33% of global gaming revenue[4].
China is also home to the world’s biggest Egaming company: Tencent.
Tencent is a $391-billion-dollar social media and gaming titan, Asia’s largest tech firm[5], the WORLD’S BIGGEST EGAMING COMPANY in terms of gaming-related revenue (estimated at $19.7 billion for 2018, or roughly 15% of the entire market)[6], and the creator of the online gaming platform WeGame, which has over 300 million users![7]
Tencent also just happens to have partnered with tiny Axion Ventures (TSXV:AXV)(OTC:AXNVF) in a lucrative REVENUE SHARING DEAL after noticing Axion’s success since their first original game Fat Princess, which became the #1 seller on PS3 and PSP in 2009.
Axion’s Retention Rates Are Signs of Future Success
And when it comes to success in the gaming industry, one of the biggest predictors is how long users continue to play a game after discovering it. The industry calls these retention rates.
Games with higher retention rates MAKE more money…and naturally ATTRACT more investment.
For example, the chart below shows retention rates for the industry’s top MOBILE games…
On that chart…
#1 is Nintendo.
#2 is Peak Games whose Toy Blast has generated over $440 million in global revenue[8].
#3 is King Digital, creators of Candy Crush, who sold to Activision for $5.9 billion[9].
#4 is Kabam who exited for $800 million[10].
#5 would be Axion Ventures’ (TSXV:AXV)(OTC:AXNVF) mobile game, Invictus…
Now, for Axion Ventures (TSXV:AXV)(OTC:AXNVF) to have a top-5 mobile game isn’t amazing for only 1 reason…it’s amazing for 500 million reasons, because every mobile game in the top 5 has turned out to be a triple digit multi-million-dollar game!
But that’s the latest development on Axion’s MOBILE game side. On their PC game side, the story is EVEN BETTER!
Because remember how the world’s biggest gaming company, Tencent, has partnered with Axion in a rev-sharing deal? Well, that deal involves replacing Tencent’s very profitable, but aging, flagship game Assault Fire, with Axion’s latest game, Rising Fire.
So, why could Tencent’s colossal scale and influence boost Axion Ventures’ (TSXV:AXV)(OTC:AXNVF) to incredible heights in the extremely near term?
Because Axion Ventures (TSXV:AXV)(OTC:AXNVF) could potentially have even better retention rates for their game Rising Fire…After their last beta test (Closed Beta 2) in early 2018, Rising Fire’s retention rate was an eye-popping 54%!
…once they qualify, it will TRIGGER Tencent to BOOST Rising Fire’s 15-million-user exposure level on WeGame by 6.7x to a whopping 100 million users! In connection with the launch, Tencent will commence a multi-million marketing campaign to raise awareness and drive player participation.
Where Will Axion’s Stock Go When the World’s Biggest Gaming Company Starts Marketing Rising Fire to 100 Million Users?
The analysts from Haywood Securities and PI Financial’s David Kwan think Axion Ventures (TSXV:AXV)(OTC:AXNVF) has between 80 to 86.1% UPSIDE and they maintain a “BUY” recommendation with PRICE TARGETS between $1.60 to $1.75!
“The recent share price weakness is a good buying opportunity in our view, especially with some key upcoming catalysts, most notably multiple licensing deals for RF (and possibly Invictus) as well as updates on the ramp of Rising Fire, particularly after the major content payload set for release next month,” says Kwan.
Why? Because these high retention rates suggest Axion Ventures’ (TSXV:AXV)(OTC:AXNVF) Rising Fire game will follow a revenue trajectory similar to that of the Tencent game it’s replacing..to be specific, that’s potential revenue of:
- $72 million in year 1
- $217 million in year 2
- $362 million in year 3
- and rocketing to $435 million in revenue by year 4!
Axion’s take of just $72 million would make them extremely profitable in the first year of Rising Fire’s commercial launch!
And with the industry’s hot M&A climate right now – like the recent news that J55 Capital Corp. will merge with Enthusiast Gaming and acquire Aquilini GameCo to create a gaming organization reaching roughly 200 million gamers – there’s always the chance a major player will simply buy out Axion’s Rising Fire game…or even the entire company.
But It Gets Even Better Because Tencent and China Are Just a Small Piece of the Pie For Axion
This under-the-radar company had already proven itself by creating popular games like MARS and Fat Princess. That’s a big part of why Tencent set up a rev-share partnership with Axion in the first place (more on that in a moment).
That partnership with Tencent gives Axion Ventures (TSXV:AXV)(OTC:AXNVF) an incredible advantage over much higher valued competition since the major players are typically locked out altogether for most of their games in China unless they struck a similar deal with Tencent.
But this China-specific rev-share deal with Tencent is just the tip of the iceberg.
You see, the Tencent partnership gives Axion Ventures Inc. (OTC:AXNVF) (TSXV:AXV) 26% of gross revenue in China from the PC version of Rising Fire.
But Axion has 100% of gross revenue rights from MOBILE sales in China!
Plus they KEEP 100% OF SALES outside China! For PC and MOBILE!
How Axion’s $50-Million+ Profit From One Game Caught Tencent’s Attention
Investing in smaller companies is part of Tencent’s savvy record of recognizing and amassing profitable investments over the years.
In 2012 they bought a 40% stake in Epic Games – creators of Fortnite – at a valuation of $825 million[11]. Today that stake is worth an astronomical $6 billion!
So when Tencent saw the success of Axion Ventures’ (OTC:AXNVF) (TSXV:AXV) previous game, MARS, they set out to repeat their pattern of successful investments.
MARS enjoyed over 23 million global downloads, including 17 million in China.
BUT EVEN MORE IMPRESSIVE, it only cost $3.6 million to create while driving profits of over $50 million and ultimately making Axion an average of $50,000 per day.
Tencent’s Strategy to Repeat The Success of Their Aging Flagship Game with Axion Ventures’ (OTC:AXNVF) (TSXV:AXV) Rising Fire
As mentioned earlier, Tencent partnered with Axion Ventures (OTC:AXNVF) (TSXV:AXV)
in a rev-sharing deal to have Axion’s latest game, Rising Fire, replace Tencent’s very profitable flagship game Assault Fire.
Tencent’s Assault Fire has been a huge revenue generator for Tencent, generating roughly $500 million per year.
But Tencent wanted a newer replacement…Axion Ventures’ (OTC:AXNVF) (TSXV:AXV) Rising Fire.
But first Rising Fire would have to pass Tencent’s strict retention rates for bringing games to market.
Those rates are based on Tencent’s past performance figures for its games that produce $400 to $500 million in annual revenue.
So they helped Axion by leveraging Tencent’s huge dataset from other games and giving Axion real-time feedback to target strategic content updates during rollout.
Rising Fire launched in the second half of 2018 on a “controlled” rollout and has been receiving rave reviews – and comparisons to the $2.4-billion-dollar Fortnite.
Tencent’s prudent “controlled” rollout strategy called for 3 escalating phases:
PHASE 1: Distributed Rising Fire to 1.5 million active users on Tencent’s WeGame platform. In January 2019, Rising Fire passed Tencent’s user retention test, triggering Phase 2.
PHASE 2: On February 5, 2019, Tencent rolled out Axion’s game to 15 million active users. On June 10, 2019, Axion announced the official delivery of ‘Season 1’ of Rising Fire. Users Tencent’s WeGame network will be able to play the new season by the end of June.
THIS IS HUGE NEWS because Season 1 could be the beginning of the revenue explosion!
PHASE 3: Coming very soon, Tencent’s final, strategicl rollout stage Axion Ventures’ (OTC:AXNVF) (TSXV:AXV) Rising Fire game where 100 million active users will be targeted for marketing at any time on Tencent’s 300-million-user WeGame platform.
And Axion Ventures’ (OTC:AXNVF) (TSXV:AXV) announcement on June 10th, could be what could trigger it!
“The release of Season 1 of Rising Fire represents a major step forward for our Company and I am proud of the work that has been attributed to this newest, and largest, content payload,” stated Todd Bonner, Chairman and CEO of Axion. “The scope and size of Season 1 is 3 times larger than any update that we have produced for Tencent in the past and is the culmination of over 3 months of work by our impressive team at Shanghai HQ. I look forward to report retention numbers from Season 1 as it is fully integrated onto the WeGame platform.”
How big a catalyst could this latest development be? To put it into perspective, Fortnite had 10 million players within the first two weeks of its launch[12] and 125 million players in the first year[13].
In other words, Rising Fire may soon have similar numbers to the hottest game in the world – in large part, because it doesn’t have to compete with leading games like Fortnite and others that don’t have access to China’s controlled market.
If all goes as orchestrated by the world’s biggest gaming company, Axion Ventures’ (OTC:AXNVF) (TSXV:AXV) Rising Fire game could become “the Fortnite” of China!
Axion Ventures’ (OTC:AXNVF) (TSXV:AXV) Strategic Launching of 4 New Games in 2019 To Take Advantage of Critical Momentum
Watch Chris Parry Interview Matt Sroka, VP of Corporate Development & Capital Markets
None of this success comes as a surprise to Axion Ventures Inc. (OTC:AXNVF) (TSXV:AXV).
Instead, their seasoned management team has already positioned the company to fully leverage their increasing exposure to the gaming world and any sudden stock movement.
In short, they’ve been busy creating additional ways to generate revenue and ensure they remain a strong and sustainable player in the gaming space.
You see, Axion Ventures Inc. (OTC:AXNVF) (TSXV:AXV) actually boasts a portfolio of 9 games in development, with 2 expected to beta launch later in 2019, and 2 having already launched this year.
Rising Fire: Spar Wars |
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Invictus: Lost Soul |
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Fighter Royale |
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Axion Ventures’ (OTC:AXNVF) (TSXV:AXV) CEO Todd Bonner summed up the company’s foresight and timing in early January 2019:
“We rarely speak of the other games in our portfolio but given indications, we feel that this additional portfolio is material. This is, in fact, the first time in the history of the Company that we expect to have multi-product and multi-platform launches in a single year. Even our smallest product, Invictus, is attracting strong interest from global publishers. Axion has already begun prototyping its 2020 portfolio, which we expect to reveal in Q2 2019.”
Axion Ventures’ (OTC:AXNVF) (TSXV:AXV) Fighter Royale game, in particular, offers a unique revenue opportunity. It launched in May 2019 on Steam, the world’s largest PC gaming platform with 43 million daily active users[16]. Steam gives Fighter Royale immediate reach to a huge and passionate market, especially since users can play the game for free.
How does a free-to-play game drive revenue? From ads, purchases of non-ad versions of the game, and micro-purchases in the game. In fact, 80% of global gaming revenues in 2018 came from free-to-play games[17].
Fighter Royale is also the only flight-simulator game in the hugely popular Battle Royale space, giving it a huge and unique competitive advantage!
Axion Ventures Inc. (OTC:AXNVF) (TSXV:AXV) has even taken proactive steps to ensure it never runs out of top-notch, low-cost developer talent by running the prestigious Game Academy[18], which only admits 4% of 30,000+ yearly applicants…that’s even lower than Harvard’s admission rate!
The Game Academy gives Axion Ventures Inc. (OTC:AXNVF) (TSXV:AXV) yet another unique competitive advantage by granting Axion first dibs on the brightest developer talent that China has to offer before they hit the open job market!
Axion Also Boasts a Top-flight Management Team With Decades Of Gaming Experience
Axion Ventures’ (OTC:AXNVF) (TSXV:AXV) management team has deep and long-standing ties with the global gaming and game developer community. Members of the team started Epic Games China in 2006 in partnership with Fortnite creators Epic Games. Here’s a quick look at the key figures behind Axion:
John Todd Bonner, Chairman and CEO:
John co-founded Axion Games in 2006 and has served as a director of Axion Games since its inception. A serial entrepreneur, John’s first startup was an insurance company in Hong Kong that he eventually exited for $888 million. He also co-founded and was an executive director of PCCW Limited, a company listed on the Hong Kong Stock Exchange which acquired Hong Kong Telecommunications Limited in 2000. In 2003, John co-founded NorthStar Pacific Partners, an Indonesian-based merchant bank, which later became a $2B fund.
Stephen Willey, Director:
Stephen Willey is currently President and CEO of Innovega Inc, a reality lens company. He is a respected pioneer in the development of a new generation of wearable technology for virtual reality and augmented reality that is expected to drive new paradigms in gaming, general entertainment, and productivity. Previously, Stephen was recruited by investors to become the first employee of Washington-based and NASDAQ-listed Microvision Inc.
Matt Sroka, VP Corporate Development & Capital Markets Lead | North America:
Matt has been involved within the capital markets sector for 10 years. He has been on management and founding teams of a diversified set of companies across multiple sectors, most recently in the video game industry. He became a shareholder of Axion Ventures Inc. (OTC:AXNVF) (TSXV:AXV) in 2016 and a member of the management team in 2018 with a focus on expanding the capital markets strategy for the Company in North
America.
MULTIPLE REVENUE GENERATORS
Axion boasts a portfolio of 9 games in development, with 2 expected to beta launch later in 2019, and 2 having already launched this year. Even their smallest product, Invictus, is a top-5 mobile game with respect to retention standards. Every top-5 title has become triple-digit revenue generating game.
RISING FIRE ON THE VERGE OF A FULL ROLLOUT
Axion just announced the delivery of Season 1 of Rising Fire to Tencent. Should Rising Fire follow in the path of its predecessor Assault Fire, conservative estimates say it could generate $400M+ in annual revenue by year 4.
EXCLUSIVE ACCESS TO WORLD’S LARGEST MARKET
Axion Ventures Inc. (OTC:AXNVF) (TSXV:AXV) has privileged access to China, a gaming market that accounts for an estimated 33% of all global game revenue while remaining off-limits to global heavyweights and competitors such as Activision-Blizzard, EA Games and Ubisoft.
[1]https://variety.com/2019/gaming/news/superdata-2018-year-in-review-results-1203109940/
[2]https://variety.com/2019/film/news/box-office-record-disney-dominates-1203098075/
[3]https://www.flatpanelshd.com/news.php?subaction=showfull&id=1554189649
[4]https://www.goldmansachs.com/insights/pages/infographics/e-sports/report.pdf
[5]https://techcrunch.com/2019/05/15/tencent-q1-2019/
[6]https://techraptor.net/content/tencent-controls-15-gaming-revenue-brought-20-billion-2018
[7]https://twitter.com/ZhugeEX/status/1126924810049740806/photo/1
[8]https://www.pocketgamer.biz/news/69130/toy-blast-has-collected-over-440-million-in-worldwide-revenue/
[9]https://techcrunch.com/2016/02/23/activision-blizzard-closes-its-5-9b-acquisition-of-king-makers-of-candy-crush/
[10]https://techcrunch.com/2017/02/28/gaming-company-kabams-roller-coaster-ride-to-a-700-million-exit/
[11]https://www.bloomberg.com/news/articles/2018-10-26/fortnite-s-epic-games-gets-1-25-billion-from-new-investor-group
[12]https://www.engadget.com/2017/10/11/fortnite-battle-royale-claims-10-million-players/
[13]https://www.theverge.com/2018/6/12/17456814/fortnite-battle-royale-epic-games-125-million-players-first-year-e3-2018
[14]http://axionventures.com/wp-content/uploads/2019/05/20190430_Invictus-Launch-Date_Final.pdf
[15]https://www.newswire.ca/news-releases/axion-ventures-launches-fighter-royale-last-ace-flying-on-steam-882571327.html
[16]https://www.scmp.com/tech/china-tech/article/2154272/tencents-wegame-platform-push-go-global-heating-rivalry-pc-gaming
[17] https://www.superdataresearch.com/market-data/market-brief-year-in-review/
[18]http://axionventures.com/game-academy/