|Bid||330.72 x 800|
|Ask||331.52 x 800|
|Day's range||325.41 - 331.36|
|52-week range||209.01 - 361.00|
|Beta (5Y monthly)||0.76|
|PE ratio (TTM)||49.20|
|Earnings date||12 May 2020 - 17 May 2020|
|Forward dividend & yield||4.08 (1.25%)|
|Ex-dividend date||11 Mar 2020|
|1y target est||2,688.57|
(Bloomberg) -- Worlds Adrift was supposed to be a multiplayer game like no other: think Minecraft meets Second Life. Released to some users in 2018, the virtual world promised to take immersive gaming to another level by using a new technology from SoftBank-backed wunderkind, Improbable Worlds Ltd. Players would build ships to explore a universe of floating islands created by other participants. Then last May its creator, Bossa Studios, said it was pulling the plug. “We fell way short of what the game’s original vision was,” Bossa co-founder Henrique Olifiers explained in a YouTube video. “What we have live today is probably perhaps 20% of the game that we wanted to launch, and it shows.”Worlds Adrift is one of at least three games using Improbable technology that were pulled last year—a setback for Improbable, which promised to revolutionize gaming by helping developers create complex worlds that rival the real one. There are many reasons games can fail, but two people familiar with the situation say Improbable is struggling in part because it surprised developers with frequent updates that forced game studios to spend more time fixing code than perfecting their products.Founded about seven years ago by Cambridge University students, Improbable is unprofitable and has only one game running on its platform. Since 2018, the company has lost its chief financial officer, chief legal officer, vice president of people operations and chief creative officer, according to their LinkedIn profiles. One high-level person who left said co-founder and Chief Executive Officer Herman Narula didn’t give executives autonomy to make their own decisions, from hiring to choosing which projects to pursue. Several people who worked with Improbable and requested anonymity to avoid hurting their careers in the insular gaming industry, also said Narula alienated game developers with his temper—shouting orders and complaints on the phone and in meetings. Improbable has since lured a former Disney executive to become the new CFO, is working with several other studios and is starting to develop its own games. Company spokesman Daniel Griffiths said that it’s not unusual for game developers to decide against a commercial launch after a trial period. Additionally, he said, studios could decide when to implement updates and were allowed to use an older version of the platform for a period of time. The company offered assistance and kept developers updated of changes in its forums and through emails, Griffiths said. He called accusations of shouting and micromanaging “hearsay” and pointed to Narula’s approval rating on the Glassdoor job review site, which was at about 83% when this article was published, and said most reviewers on the site would recommend working at Improbable to a friend.As for employee attrition, Griffiths said that the company’s voluntary turnover rate is in line with the tech industry, which is high. A report from LinkedIn put employee churn for tech at 13.2%, the highest of all the industries it surveyed. Improbable has an internal tool that lets employees offer anonymous feedback as part of efforts to manage its culture, he said.The London-based startup’s travails are just the latest setback for SoftBank Group Corp.’s Vision Fund, which in 2017 led an investing group that plowed $502 million into Improbable. Along with Narula, SoftBank is one of two Improbable shareholders that have significant control, with a stake of 25% to 50%, according to Companies House, the U.K. registrar of companies. While some of SoftBank’s bets have paid off, such as its 2018 sale of a majority stake in Flipkart Online Services Pvt Ltd. to Walmart Inc. for $16 billion, several of the Japanese investor’s companies have run into difficulties recently. WeWork pulled its initial public offering, robot pizza maker Zume Pizza Inc. announced it was cutting hundreds of jobs in January, and Indian lodging startup Oyo Hotels is eliminating thousands of employees and losing money after an aggressive expansion. SoftBank didn’t provide a comment.Narula, the son of Indian construction magnate Harpinder Singh Narula, founded Improbable in 2012 with Rob Whitehead, a fellow graduate student at Cambridge who’s now chief product officer. The men originally worked out of a barn next to Hyver Hall, the Narula family’s mansion, before moving to an office in central London two years later. They’d met in the university’s computer science department where they bonded over a shared passion for games, dreaming of creating huge, detailed virtual worlds where lots of people could play together.SpatialOS was going to be the tool that made those dreams a reality. It helps developers create complex, simulated environments. Plants and animals continue to grow and reproduce even when nobody’s playing; it can enable programs that mimic how electrical grids, transportation networks and traffic work together. It promised to create elaborate, persistent worlds unlike anything that had been built before. “We’re in a place today where it is actually possible to create artificial realities,” Narula said in a 2017 interview with Wired. “Basically, we want to build the Matrix,” he joked. SoftBank’s investment that year was one of the biggest in a U.K. startup, on par with Google’s 400 million pound ($511 million) acquisition of artificial intelligence firm DeepMind. Before that, Improbable got early funding from Andreessen Horowitz, which put in about $20 million in 2015, as well as billionaire Li Ka-shing’s Horizons Ventures and Singapore’s state investor Temasek Holdings Pte, which were part of a group that invested $30 million later that year. All told, the company’s attracted more than $600 million in investment. Even after SoftBank’s investment, Narula retained control of his company, keeping 75% of the voting rights, according to regulatory filings. People who know Narula describe the 31-year-old executive as unusually charismatic and persuasive, drawing people into his “reality distortion field,” a characteristic famously attributed to Apple Inc. co-founder Steve Jobs. During a Ted talk last year, Narula said the types of games his creation enables will reshape human relationships and identity as people spend more time together in huge, collaborative worlds. “If we could co-inhabit, co-experience things together, undiminished by physical frailty or by lack of context, create opportunities together—that changes things,” Narula said in the talk. “That bonds people.”Bossa Studios was Improbable’s first big gaming customer to use its technology platform. The two companies began discussions about what they could build together in 2014, giving some users early access to Worlds Adrift in 2018. It was a major departure for a gamemaker that previously specialized in simpler, social titles, such as I Am Bread, “a beautiful story of one slice of bread’s epic and emotional journey as it embarks upon a quest to become toasted.”Following Bossa’s vote of confidence, Spilt Milk Studios decided to give Improbable a try with a game called Lazarus. Described as a sci-fi twist on Groundhog Day, the game let thousands of players fight over technology and territories in a world that reset weekly. After about three years letting players test the game, Spilt Milk shut it down in September, saying the game was too expensive to continue and cited the costs of maintaining, running and updating the game as it became more feature-packed. On its website, Improbable says it costs “slightly more” to use SpatialOS than traditional cloud-hosted, dedicated game servers. Improbable estimates that for the smallest “templates,” hosted in the U.S., developers are paying 8% to 35% more per hour.Bossa declined to comment and Spilt Milk didn’t reply to requests for comment. Both are focusing on other games. The biggest failure so far has been Automaton, a SpatialOS game developer which last year went into administration, the British version of bankruptcy. Its Mavericks: Proving Grounds game was going to be a 1,000-player “battle royale” shooter with users ducking in and out of abandoned buildings and running across landscapes to be the last one standing. The game had weather systems, and players left footprints and shell casings behind that let others track them. Mavericks was going to be vastly bigger than similar games, like Fortnite, which typically host a maximum of 100 people at once. Big, complicated games like Mavericks are expensive to develop, and Improbable offered studios financing ranging from thousands to millions of pounds, the people said. Studios in return agreed to give Narula control over aspects of their business including communications and financials, depending on the deal, people familiar with the arrangements said. Game makers also agreed not to make disparaging comments about Improbable, they said.Last year, Improbable provided Automaton a credit line of about 5 million pounds that could be converted into equity, according to the administrators’ report. The deal gave Improbable some control over Automaton’s finances. But Improbable became so involved in the game’s development that Automaton felt more like a subsidiary than an independent studio, and employees complained that they didn’t know who was making decisions, people familiar with the episode said.Then last summer, Improbable told Automaton, which had drawn down less than a third of its credit line, that it would be withdrawing further funding, according to the administrators’ report. No other benefactors materialized, and the firm, which had been profitable through the fiscal year ending in May 2018, entered administration with just 30% of Mavericks development completed. As part of discussions about the company’s insolvency, Improbable said it would be willing to take on about 20 staff who’d been working on the project. The company had 40 employees at the time. Automaton’s founder, James Thompson, now works at Improbable as head of product research. He didn’t respond to requests for comment.The Improbable loan was meant to be a bridge while Automaton looked for other investors, Griffiths said. The loan was to be used specifically for Mavericks, and did give Improbable some oversight over how the money was spent, but was never meant to fund the game’s entire development, he said. Improbable decided not to extend the loan further after Automaton notified them that it hadn’t secured any additional money, though the company did contribute to a fund for Automaton’s employees who were affected by the administration, he said.Improbable, which is private, reported that sales rose to 1.22 million pounds for the year ended in May 2019, double the revenue from a year earlier, but less than the 7.8 million pounds in fiscal 2017. Its net loss narrowed to 39.2 million pounds from a 50.4 million loss in 2018 as the company invested in its technology and expanded, adding employees.In the absence of significant game traffic on its platform, Improbable has said its main revenue source has come from defense industry projects.The company’s next move is to develop its own games. Improbable has set up studios and bought Midwinter Entertainment, a Washington state-based SpatialOS developer, in September. No games are ready for commercial release, though Midwinter has been play-testing one title, called Scavengers, where opposing players must decide whether to join forces to defeat monsters and survive in the wilderness. The company also acquired game development consultancy the Multiplayer Guys in September and hosting firm Zeuz in February.There are also a number of other SpatialOS games in development including Seed, a multiplayer game by Klang, and Wizard’s Wrath, a fantasy first-person-shooter from DragonfiAR.Improbable has also recently attracted a new CFO, Dan Odell, who spent 15 years at Walt Disney Co. where he was finance chief of Maker Studios and Disney Mobile and Social Games, the company said. But so far, the only game for sale is from NetEase Inc., a Chinese gamemaker that invested more than $50 million in Improbable in 2018. Called Nostos, the multiplayer survival title launched as an early release in December.“It’s a great team with solid technology, and Herman Narula is a visionary CEO,” NetEase said in an emailed statement. “We chose to work with Improbable for their advanced technical capability and the increasing usability of their technology further confirmed our choice.”Nostos got three out of five stars on game-distribution platform Steam, with reviewers hailing its promise and beautiful graphics, but complaining that the game is unpolished and buggy. NetEase developers posted in January that they realized there were some problems and had been working on improving performance issues.“I really want to like the game, I really do but there isn’t much game here,” the top reviewer, the self-styled Trashgoblin, wrote in December. \--With assistance from Nate Lanxon.To contact the author of this story: Amy Thomson in London at firstname.lastname@example.orgTo contact the editor responsible for this story: Giles Turner at email@example.com, Robin AjelloMolly SchuetzFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- The coronavirus epidemic in China cast the production of the world’s electronics into disarray. What’s less well known is that it also disrupted the global supply of digital goods for games.Beyond iPhones, laptops and consoles, China is also the largest production base for digital art in mobile, PC and console games. Global developers from Activision Blizzard Inc. to Ubisoft Entertainment rely on third-party studios in the country for a huge chunk of their art, enticed by the same cheap-but-capable labor force that draws manufacturing orders from Apple Inc. and Nike Inc.Art suppliers across gaming hubs in Shanghai and Chengdu are failing to deliver costumes, armor and other digital assets on time, because designers were barred from studios by strict quarantine rules -- a major impedient in a line of work that requires stringent data security and networks of high-powered workstations. That’s forced gaming companies to reduce or cancel orders, according to people inside the industry, and scout for alternatives in Southeast Asia and Europe to take up the slack.Jefferies analysts led by Ken Rumph estimate that as much as 50% of art creation in Western games is done in China, either by local outposts of major developers like Ubisoft and Electronic Arts Inc. or by outsourcing. “If delays are extensive, we would expect a growing list of game delays,” they wrote in a February note.Read more: China Has Taken Over From the U.S. as the ‘Gamer Capital of the World’While the full scale of this disruption is yet to be defined, the games industry is already taking hits from its China reliance. The American developer of popular sci-fi role-playing title The Outer Worlds said in February it had to delay the release of the Nintendo Switch version -- after the China-based studio it hired to adapt the game paused operations during the virus outbreak.“We redid all the planning for all our projects,” said Philippe Angely, a senior executive with Virtuos Ltd., whose China team is handling The Outer Worlds’ Switch adaptation. With 1,200 developers across the cities of Shanghai, Chengdu and Xi’an, Virtuos estimates an average of a two-week delay on projects, he said, and a halving of February revenue as a result.Virtuos, whose clients include Ubisoft, Square Enix Holdings Co., and Tencent Holdings Ltd.’s Riot Games, has only just gotten back to full capacity in the past few days, but it remains hampered by local restrictions. Its 600 staffers in Chengdu, for instance, have to rotate across two 8-hour shifts to comply with government-imposed limits on the number of people in indoor areas.Read more: Coronavirus Forces World’s Largest Work-From-Home ExperimentThe online games industry has been among the few beneficiaries of the coronavirus outbreak, as time and money spent on games have surged with millions of people confined to their homes. But the tale is different from the supply side.“Developers and publishers can make revenue as long as they have games running. For outsourcing companies, we have to work every day so clients will send money to our bank accounts,” said Zhang Jian, executive vice president with Chengdu-based Sheer, which has worked with clients including Tencent, NetEase Inc. and Ubisoft.To prevent infection and keep business running at the same time, Sheer has relocated half of its 300 developers to a new office floor the company just rented, Zhang said. Employees are required to sit at every other desk and wear face masks throughout the day. Yet about half a dozen of his company’s projects -- both Chinese and foreign -- have been scaled back or canceled entirely. The studio, which provides services from concept art to 3-D environment creation and character animation, won’t be able to take new orders until the end of March, Zhang said.“The impact on the cash flow will last for the full year,” he said. “We are not in big danger, but we’ll feel a lot safer if we have money on the books.”Unlike supply chains for physical goods, migrating a digital one away from China can be done relatively swiftly. Last year, Ubisoft opened a new studio in Vietnam while Sony unveiled plans to build a Malaysia outpost to make games for its PlayStation consoles. Such moves help global companies tap even cheaper local talent and reduce the risk of regional disruptions like the coronavirus, said Darang S. Candra, a Jakarta-based analyst with game researcher Niko Partners.In Southeast Asia, Vietnam’s Appota, Malaysia’s Streamline Studios and Thailand’s Asiasoft are examples of studios capable of potentially taking orders away from China, he added.“For games that are targeting the Chinese market, we expect no exodus to happen any time soon,” Candra said. “Nevertheless, some outsourcing work might move outside of China if the situation does not recover soon.”To contact the reporter on this story: Zheping Huang in Hong Kong at firstname.lastname@example.orgTo contact the editors responsible for this story: Edwin Chan at email@example.com, Vlad SavovFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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(Bloomberg) -- Active users of mobile games developed by Tencent Holdings Ltd. and NetEase Inc. have surged in China as quarantines keep people at home, underscoring the relative outperformance of their shares amid the coronavirus-driven market tumult.For Mahjong and Game For Peace, two of Tencent’s most popular titles, daily active users increased 109% and 44%, respectively, in the two months through February, according to App Store data from mobile app researcher Apptopia Inc. Other Tencent games including Honor of Kings, Happy Poker, and QQ Speed have also seen usage increases of more than 20% over the two-month period.The spike in game-playing comes as more people in China have been subject to quarantines as part of the nation’s attempt to contain the coronavirus, which has spread from the city of Wuhan throughout the world. At least 80,000 cases have been reported in China, and the illness has killed almost 3,000 people there.“Online entertainment and gaming clearly benefit as people are locked down in their homes as supported by active users and time spent increases,” Dara White and Derek Lin, who help manage $494 billion of assets at Columbia Threadneedle, said by email. “During this period, these companies should be more defensive. However, user penetration and consumption activities in this area are relatively mature and thus debatable if it has any longer lasting impact on earnings and stock prices.”The Netease-produced game Werewolves of Miller’s Hollow has also seen its daily active users more than double since December, with growth of 131% in China. A majority of the surge in game-playing began in late January after coronavirus quarantines kept people indoors during the Chinese New Year, limiting their entertainment options.This year’s increase was more than double the growth seen during the previous Chinese New Year holiday period. Aggregate DAUs across all six games grew 48% from December 2019 to February 2020, compared with 19% in the year-ago period.Both Tencent and NetEase have outperformed the Hang Seng Index by more than 10% this year. And analysts see more gains ahead for stocks tied to in-home entertainment as more people steer clear of the outbreak and look for ways to pass the time at home.\--With assistance from Tom Lagerman, Marvin Chan, Colleen McElroy and Yoyo Cheng.To contact the reporters on this story: Kamaron Leach in New York at firstname.lastname@example.org;Sydney Maki in New York at email@example.comTo contact the editors responsible for this story: Catherine Larkin at firstname.lastname@example.org, Richard Richtmyer, Jeran WittensteinFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Baidu Inc. predicted revenue may slide as much as 13% this quarter, joining its fellow technology giants in warning about the impact of the deadly coronavirus.China’s internet search leader forecast a 5% to 13% plunge in sales to between 21 billion yuan ($3 billion) and 22.9 billion yuan in the March quarter, missing an average projection for 23.4 billion yuan. Its U.S.-traded shares slid as much as 1.6% in extended trading.From Microsoft Corp. and Apple Inc. to Alibaba Group Holding Ltd., the world’s largest corporations have either scaled back on projections or warned of a hit to their operations from Covid-19. Apart from the uncertainty of the outbreak, Baidu has been grappling with a slowing home economy and competition from upstarts like ByteDance Inc. that’ve lured advertisers away and depressed marketing rates. Chief Executive Officer Robin Li said it will take time for the world’s No. 2 economy to recover.“The return of economic growth will be a long-term issue after the epidemic, but many new opportunities are emerging,” the billionaire founder told employees in an internal memo obtained by Bloomberg.Certain businesses can thrive despite the epidemic, including online entertainment and education, Li added. Baidu’s Netflix-style unit iQiyi Inc. projected a better-than-expected revenue gain of 2% to 8% this quarter.“The virus has affected consumer spending, so naturally advertisers will want to postpone their budgets,” said David Dai, a Hong Kong-based analyst with Bernstein.Read more: Virus Outbreak Exposes $46 Billion Rift in China’s Tech IndustryIn recent days, anxiety has mounted about the spread of the virus outside of China, where it originated. But Baidu executives on Friday emphasized they remained upbeat about a gradual return to normality.“Business activities have started to pick up as people return to work. At Baidu, our employees are gradually returning to the office, applying strict safety measures,” Chief Financial Officer Herman Yu told analysts on a conference call. “We assume businesses across China will do the same, and that our marketing services will pick up at a faster pace into quarter-end.”Baidu had earlier reported better-than-expected revenue for the quarter ended December, when ad demand stabilized and pressure from competitors eased. To offset stalling growth, it looked to improve its bottom line especially by tightening content costs related to iQiyi. Longer term, the company is investing gains from its core search and news services into divisions like driverless cars and smart speakers.Baidu’s shares rallied after the company reported preliminary revenue for the December quarter that beat the highest of analysts’ estimates, but that gain’s mostly been erased since the epidemic triggered a broader selloff of Chinese stocks. The company has been surpassed in market value by rivals like Meituan Dianping and NetEase Inc. after shedding more than $11 billion last year.“For the majority, or probably all of the industries who advertise on us, those kinds of demand don’t disappear -- they’re just postponed,” Li said on the call Friday. “If you plan to marry, you’ll still get married. If you plan to buy a car, you’ll still buy a car. If you plan to become prettier, you’ll still go for cosmetic surgery. This kind of demand will come back after the epidemic ends.”To contact the reporter on this story: Zheping Huang in Hong Kong at email@example.comTo contact the editors responsible for this story: Edwin Chan at firstname.lastname@example.org, Colum MurphyFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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