Valve’s insane profits, Xbox Game Pass price hike, Axie’s growth playbook – Games Growth with Upptic

In this episode, shocking leaks reveal Valve’s staggering profitability, with only 336 employees generating nearly $9 billion in revenue, highlighting its unique work culture and dominance in the gaming industry. Axie’s new Web3 growth playbook is dissected, offering essential strategies for community building and marketing in Web3 gaming. Meanwhile, Xbox Game Pass announces price hikes and new subscription tiers, sparking discussions on its value proposition and long-term viability.

Chapters

• Valve’s INSANE Profits Leaked
• Axie’s Growth Playbook REVEALED
• Xbox Game Pass Costs HOW MUCH?

Valve’s INSANE Profits Leaked

In a surprising leak, Valve’s business details have come to light, revealing astonishing profitability metrics. According to the leaked data, Valve employs a total of 336 people, with only 79 working directly on Steam. The company’s revenue is estimated at a staggering $8.9 billion. Warren provides some insight on Valve’s unique work culture – which offers amenities like massage therapists and on-site dining, along with substantial employee autonomy. Despite having a work environment reminiscent of a typical “Silicon Valley tech company,” which often collapses, Valve has thrived.

Valve’s private ownership enables it to focus on long-term projects and maintain a steady state rather than pursue exponential growth. Xander speculates that Valve might be the most profitable company per employee globally, with revenue per employee estimated at around $19-$25 million annually. The leak, originating from an antitrust lawsuit filed by Wolfire Games (the creators of Humble Bundle), exposed that Valve’s headcount in 2021 was 336, with the largest division being games, employing nearly 200 people. Valve’s hardware division, including the Steam Deck, has seen growth since the data leak.

The company’s private status shields it from investor pressure, allowing for ambitious projects and sustained efficiency. Valve’s dominance in PC game distribution and its highly regarded Steam algorithm contribute significantly to its success. The lawsuit detailed Valve’s pay structure, gross margins, and commissions. This data underscores the difficulty in replicating Valve’s headcount and profitability model due to its market position and unique corporate culture.

Axie’s Growth Playbook REVEALED

Warren introduces a tactical segment focusing on Axie’s Web3 growth strategies, highlighting a comprehensive playbook by Jihoz, the creator of Axie Infinity. The playbook is considered essential reading for anyone involved in Web3 gaming or consumer-facing Web3 products. Axie has pioneered significant concepts in Web3 gaming, such as Play2Earn and public growth marketing dashboards.

The playbook emphasizes the importance of incentive alignment, referral systems, working with UGC and creators, goal structuring, community building, and the role of data in marketing. Strategy highlights include leveraging micro-influencers for more engaged community building over larger KOLs (Key Opinion Leaders). Effective collaboration with content creators involves valuing their contributions beyond just financial compensation. Upptic’s own approach includes a creator mentorship program to support emerging content creators.

Setting both outcome and process goals is vital for community growth and marketing. Jihoz’s concept of “gifting” involves targeted giveaways and partnerships to attract ideal users from other projects. The significance of developing a community presence and engaging in “Discord grinding” is noted for project founders in Web3. Axie’s current focus is on leveraging the Ronin chain to scale up by onboarding users from other games and projects.

While Warren critiques some of Axie’s strategies, noting barriers to broader market adoption, he acknowledges the importance of balancing complex needs of enfranchised players with the accessibility for new users. The resilience of Axie, particularly their recovery from a significant theft, is highlighted, emphasizing the broader lessons for Web3 and gaming communities.

Xbox Game Pass Costs HOW MUCH?

At the Summer Game Fest, Xbox announced upcoming price increases and new subscription tiers for Game Pass. Xbox Game Pass Ultimate will rise from $17 to $20 per month, including all titles and day-one releases. PC Game Pass will increase from $10 to $12 per month. A new tier, Xbox Game Pass Standard, will be introduced at $15 per month, excluding day-one titles. This pricing strategy is likened to Netflix’s tiered approach to capturing various market segments.

Despite the price hike, Warren argues that Game Pass remains a valuable offering, suggesting the lower tier is likely just for optics as most gamers will choose the more comprehensive options. Data shows Game Pass growth from 10 million subscribers in 2019 to 34 million recently, generating substantial revenue. Although there are mixed claims about subscriber growth plateauing, Xbox CEO Phil Spencer maintains that Game Pass is profitable.

The “land and expand” strategy, where initial low pricing attracts users followed by gradual price increases, is noted. Subscription fatigue is a concern, given the multitude of services people already subscribe to. Despite criticisms of Game Pass growth being stagnant, its large subscriber base and revenue indicate long-term viability. For dedicated gamers, the annual cost of $240 is seen as reasonable compared to other gaming expenses. Warren predicts that the revenue increase from the price hike will outweigh any potential unsubscribes. Future subscriber numbers will likely be clearer in the next Microsoft earnings report.