Steven Zhao

Dude Perfect raised $100M for global biz expansion. The deal is getting lots of buzz, but our team’s math signals challenges ahead. Let’s break it down… DEAL DETAILS • $100 - 300M growth capital investment • Led by Highmount Capital • Unclear if 100% invested upfront OR draw down of commitment over time • No previous capital raised USE OF FUNDS • Hire mgmt team to expand biz • More live experiences incl int’l tour, consumer products • Grow content formats, frequency, channels, global localization e.g. animation, TV, movies, streaming • Extend brand beyond 5 founders by building talent network • New HQ in Frisco, TX as prod facility and “family-friendly entertainment destination”: – Retail store, podcasts / gaming / fan UGC spaces, trick shot tower, DP museum, mini golf, restaurants – Original plans for 3-story, 30 acre facility est to cost $100M+, 2 yrs to build COMPANY OVERVIEW: Dude Perfect • Digital-native comedy and sports media brand • Faith-based mission: “We’re about giving back, spreading joy and glorifying Jesus Christ”  • Other YouTube franchises: “Stereotypes,” “Overtime”, “Bucket List”  • Media brand also incl books, mobile games, board games and toys, and merch / retail / food and beverage partnerships • 25 current team members PERFORMANCE HIGHLIGHTS • 60M YouTube Followers, 17B views • Est 2024 revenue: $50M per DP • Est 2023 and 2022 revenue: $25M and $20M per WSJ  • Consumer product partnerships incl Nerf toy line, Columbia Sportswear • Partnered with A Parent Media co to launch a streaming service • ESPN “30 for 30” doc premiering at Dallas Int’l film festival • TV series on CMT in 2016, later aired on Nickelodeon • Alternate broadcasts for Amazon’s Thursday Night Football • 4 live nationwide tours as of 2023 ORIGIN STORY • Founded 2009 by 5 friends at Texas A&M • Cofounders = twins Coby Cotton and Cory Cotton, Tyler Toney, Cody Jones, Garrett Hilbert • Started as YT channel featuring trick shot videos INVESTOR OVERVIEW: Highmount Capital • Growth stage and middle mkt PE fund for tech, media, healthcare • Founded in 2023 by jason illian and David Hawkins • 4 team members on website + advisor • 3 team members have faith-based ties per bios • No other investments listed on website other than DP My takeaway... I really like and support the trend of increased investment into YouTubers and digital-native media brands. But as I wrote about in my 2024 State of Creator x Media capital markets reports (will link them below), investment must match market and opportunity size. To ensure good ROI, and to set good precedent for future investment into our space. The DP bet is exciting, but could be overly optimistic based on our prelim math. My colleague Michael Booth's post breaks the math down (link below). More analysis to come in my Friday newsletter. —- I’m the founder of RockWater Industries. We do m&a and strategy advisory for media, agencies, and creator economy. My dm’s are open. #media #agency #creatoreconomy

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The Hidenburg report on Roblox is FUD and Joost van Dreunen rightly calls BS on the tone and superficial nature of the analysis. Every app on the Internet has bots in their numbers. But the level of deception that is being alleged here would be fraud and there would be jail time for execs if they were intentionally misleading the street - which I very seriously doubt is the case. Also, we dealt with this child predator problem on Club Penguin all the time. Barely a week went by that we didn't make a criminal referral. This is the whack-a-mole of running an online service with kids. Roblox has built an expertise in this type of moderation that's different from what Facebook's moderators do. Comparing numbers of mods is useless because they do different things. Joost rightly points out that incident reporting is the better way to measure this, and Roblox has far from the biggest problem. But evidence that there are referrals is not evidence of unrestrained abuse. To the contrary, its evidence of enforcement. Hindenburg is a short seller. Easy money to be made for them by FUDding the stock. I'd keep their agenda in mind when evaluating this. "The Hindenburg report presents a loud but largely toothless challenge for Roblox, even if it highlights issues that deserve more serious attention. What weakens Hindenburg’s claims is that despite its self-righteous tone, the research remains thin, decontextualized, and targeted. Instead of presenting a quantified assessment and comparative analysis (something you’d expect from a financial firm), it leans into openly accusing Roblox of deliberate malpractice and indifference toward child safety in favor of growth. It makes an emotionally evocative argument, certainly, and taps into the increasingly pronounced skepticism among regulators and researchers."

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When looked over the long haul, Boom Beach by Supercell has seen long-term engagement decline (despite bringing great amount of revenue and success) over its lifecycle; a common trend for many mobile games as their player bases gradually lose interest after peak growth. Quickly looking, AppMagic shows (https://lnkd.in/dMKqe7K6) that while e.g., their Warships update successfully reinvigorated engagement, giving players a competitive mode and new objectives, this effect was not overall solution for them as overall the long-term engagement is back on slowing down. Since then, DAU and MAU numbers have waned over long period of time, underscoring a need for further refreshing gameplay to keep the core player base engaged and finding meaningful ways how to introduce the game for new audiences. Obviously, it is not an easy job to refresh something like this for growth back again -- but Supercell has done this couple times already; so maybe once more? Specifically, Supercell has couple time managed on revitalizing games through updates focused on creativity and e.g., competitive dynamics. Boom Beach could benefit (yet again!) from expanding its core gameplay to tap into new dynamic experiences, which could be also attractive for new players to engage in the game. It could be even a good strategy overll to push these in beats, if overall core issue vs. symptoms is challenging to treat. For instance, as a quick idea for Boom Beach, a dynamic treasure-hunting world map mode could add a fresh layer of excitement. In this event-based mode, players could raid islands for treasures, facing both in-game enemies and other players in PvP combat when doing that. It could have a new fresh type of gameplay mechanic in it, as well as involve Warships in the design -- on top of which different leaderboards or ladders could be tied to the whole experience. Furthermore, adding more dynamic social interactions and cooperative PvE missions could amplify player engagement, creating content that feels less predictable, more community-oriented, and more self-propagating as well. Other potential areas could include looking into user-generated content to build longevity. Being bold and expanding the game's universe and fostering social and cooperative mechanics, in alignment with players' feedback and psychological motivations, could overall drive a revitalized interest in Boom Beach. Again, and obviously, this is not an easy task and many games face downhill over their lifecycle, which is fully normal -- but it doesn't say innovation and creativity shouldn't stop always. Trying also fresh strategies is important. What do you think? #GamingIndustry #MobileGames #Supercell #BoomBeach #GameDesign #AppMagic #GamesIndustry #GameIndustry #F2P #FreeToPlay #MobileGaming #VideoGames #GameBusiness #GamesBusiness #OpenToWork #ProductManagement #Gaming #Games #GameDev #GameDevelopment #GameDevelopers #LiveOps #Monetization

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"As we grew the game industry a hundredfold, 75% of the time investors could prove the game biz would always fail." — Bing Gordon, xCEO of EA and Partner at Kleiner, Perkins, Caufield & Byers. Mobile gaming has been declared dead more than once. Supposedly, it has matured again and it's time to move on to the next big thing. Yet Roblox revenue is up 31% year over year, and daily active users are up 27% (https://lnkd.in/gDvn5KeK). How can that be? Anyone with kids doesn’t need these Roblox numbers to see that the next generation consumes content differently. When they enter the workforce, they’ll spend on mobile games and apps, valuing this digital interaction more than previous generations and in ways we may not yet understand. I’m aware of today’s challenges—I feel them as a supplier to mobile gaming companies. But I’ve been in this industry long enough to know that real growth often comes from unexpected places. Analysts often do not include these unexpected forces in their predictions. https://lnkd.in/gp8vf9Dq

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WBD has a$30.68b market cap. Studios & DTC revenue is 55% of total. That implies a ~$17b valuation for the Studios & DTC business. Comcast can buy that, but so can many others.

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🎣 The fastest growing game on Roblox right now - "Fisch" The growth is mind-blowing: - October 5th launch: 2,000 concurrent players - 44 days later: 271,834 peak concurrent players - 157 Million visits - 18.9 minute average session time - 87.9% player like ratio (with no incentives!) At this rate, hitting 500,000 concurrent players during December peak season isn't just possible - it's looking probable 📈 What makes a fishing game explode like this? Simple game design executed perfectly. Over 400,000 different fish variations to discover, customizable boats, enchanted rods, rare baits - all creating that "just one more cast" feeling. Every catch could be that ultra-rare fish that has the Discord buzzing. The developer Nate (supported by DoBig Studios) has mastered the art of retention. Regular code drops, constant communication, rapid bug fixes, and swift action against cheaters. The live ops standard is incredible. Here's what's really interesting - Fisch is breaking out of the traditional Roblox bubble already, which is incredibly rare. Following the summer phenomenon of Dress to Impress bringing new audiences to Roblox, Fisch is now attracting non-Roblox content creators and streamers in waves. The power of simple, well-executed game design combined with exceptional community management is creating something special here. This isn't just about catching fish - it's about building a community that spans beyond Roblox's traditional boundaries.

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Keep an eye on Rembrand, a digital platform using AI to add virtual product placement into videos. They just raised $23 million from savvy investors like Tom Chavez and others. The concept is relatively simple and has been around for a while, but the company is definitely getting some traction. Rembrand began with YouTube and expanded to LinkedIn, TikTok and Instagram. They’ve also worked with about 20 brands including those under PepsiCo, L'Oréal, and Amazon. The company is led by CEO Omar Tawakol, who has great startup experience. He sold data management platform BlueKai to Oracle in 2014 and voice collaboration platform Voicea to Cisco in 2019. It’s another intriguing use of AI and video, and it gives advertisers another weapon in their arsenal as they monetize content. What other uses of AI advertising have you seen that impresses you?

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Roblox will give 𝟐𝟓% 𝐦𝐨𝐫𝐞 𝐑𝐨𝐛𝐮𝐱 for non-mobile purchases — that'll tip the scales from app store (Google, Apple) to retailer (Walmart, Target, Amazon), and put more money in the hands of players & creators: The 30% transaction fee on mobile platforms, often called the 'app store tax,' has long been protested by developers. At times, this can mean a legal fight, as with Epic Games v. Apple in 2020. But lawyers need not be involved. After all, the 'tax' only applies to purchases made through mobile systems — find ways for spend to come through other avenues, and you're golden. Hence why so many games with virtual currencies have been encouraging players to purchase gift cards online or at retail stores... a plan Roblox is now doubling down on. 𝐊𝐞𝐲 𝐓𝐚𝐤𝐞𝐚𝐰𝐚𝐲𝐬: 1️⃣ A win for retailers... ...and, not just for extra purchases. Sure, they'll get some margin on gift card sales, but, more importantly, this will drive major foot traffic to their stores & websites, causing tons of extra purchases (who ever just buys 1 item?) It's for this reason that retailers are the more agreeable partner — the value they gain lies beyond the gift card's price. Where app stores must take from a set pie, retailers can grow it and take from the difference. That's a winning formula. 2️⃣ Most of Roblox Traffic is Mobile While this is a major change, do remember, it will largely apply to a minority. Last we heard, 78% of sessions occur on phones, meaning even with incentive to pay otherwise, many will still purchase through them. Will +25% affect some? Sure. But given so much spending is mid session, it's a habit that needs to be built — and that's why deals which give exclusive items with gift cards, like the recent Walmart x Paramount Spongebob one, will be huge in causing the shift. Because 'more' & 'better' can be trumped by convenience. Exclusivity can't. 3️⃣ The Roblox Tax Cuts If you think about it, that's what's happening: the government (platform) is leaving more disposable income for citizens (players), which they hope will be spent on small businesses (creators). I except to see the normal accelerated growth we do IRL, but am curious how far the resemblance could go — eg, do creators start raising prices? In either case, we've seen as developer pay-outs go up (now $800+ million the last 12 months) the quality of work rises with it... So if there's any incredible projects in the next few months: we'll know why.

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Late Stage Gaming VCs: "We would be interested in companies generating $100M+ in annual revenue that are profitable." Early Stage Gaming VCs: "We would be interested in companies generating $100M+ in annual revenue that are profitable." #vctalk #joke

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Dear Stretch Network Partners, Please allow me to inform you about additional changes that will take place in the global network on July 8. 🍀 All Heads-up tables will be removed 🍀 Badugi cash tables will be removed 🍀 Sonic cash tables will become 6-max 🍀 The minimum buy-in for Sonic Omaha cash tables will be 20 BB 🍀 Sonic Omaha 7 card cash tables will be added These changes apply only to cash tables and only to our Global Network. In your local networks, you decide your product strategy, but we would be happy to assist you in managing your local networks as well. If you need our help, please contact us. The above-mentioned changes are part of the new strategy for the Stretch Network Global Network, which prioritizes the comfort of novice players and casual traffic to maintain the proper balance of our ecosystem between amateurs and professionals. Caring for the ecosystem of the Global Network is our priority. The changes we are implementing now and will continue to implement will significantly improve the user experience for your players, extend their LTV, ARPU, and, of course, Revenue.

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🎙️ New Podcast Alert: How AI and Blockchain Are Revolutionizing Sports Fan Engagement The #sports industry is experiencing a groundbreaking #transformation, powered by #AI and #Blockchain technologies. These innovations are not just enhancing athlete performance but also redefining how fans connect with their favorite teams and players. In our latest #podcast, we dive deep into the evolving dynamics of fan #engagement, where platforms like LootMogul are leading the way: 🎟️ Fan #tokens and digital collectibles are creating new opportunities for fans to own a piece of their favorite teams. 🧠 Virtual coaching powered by AI delivers tailored insights and experiences, empowering athletes and fans alike. 💻 By merging traditional sports loyalty with cutting-edge digital tools, the connection between fans and athletes has never been stronger. Imagine a world where fans are no longer passive spectators but active participants, owning digital teams, earning exclusive perks, and enjoying immersive virtual experiences. This is the future of sports, and it’s happening now. 💬 Tune in to hear industry experts break down the impact of these technologies and share insights into what lies ahead for sports tech. 🎧 Listen now to the full podcast here: https://lnkd.in/ei7hpigz Let’s discuss! How do you think AI and Blockchain will shape the future of sports? Drop your thoughts below! Apurva Rajkotia Powerhouse Sri Peddu Kshitij Golwalkar Rajas Neve Navin Prasad Bahwan CyberTek #Podcast #SportsTech #AI #Blockchain #FanEngagement #DigitalCollectibles #LootMogul #atheletes #investing

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