Planet Digital Partners

Early Stage
BETA - Reg D

Invest in video games

Overview

Platform

Self Managed

Start Date

07/11/2019

Close Date

07/24/2019

Min. Goal

$25,000

Max. Goal

$38,000,000

Min. Investment

$25,000

Security Type

Equity - Common

Funding Type

RegD 506(c)

Location

Cincinnati, Ohio

Industry

Financial & Insurance Products & Services

Tech Sector

Fintech

Planet Digital Partners is raising funds independently through Reg D 506(c) raise. The company provides a platform for investors to invest in high-quality video games through a tokenized fund. The fund is led by seasoned professionals in the video games industry and invests in video games like Xbox, Nintendo Switch, and PlayStation 4. Steven Grossman, David Rosenbaum, and Michael Stiegelmeyer founded Planet Digital Partners in 2018. The current crowdfunding campaign has a maximum target of $38 million. The campaign proceeds will be used for growth and expansion.
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Other Information

Summary

Minimum Investment: $25,000 (Class A), $100,000 (Class B)
The Planet Digital team has been selected as a “Deal To Watch” by KingsCrowd. This distinction is reserved for deals selected into the top 10-20% of our due diligence funnel. If you have questions regarding our deal diligence and selection methodology please reach out to hello@kingscrowd.com.

Problem

The video game industry is booming. Worldwide, console based, PC and mobile video games represent a $135B business. Newzoo, a leading market consulting firm, projects the global games market for all platforms to grow at a compound annual growth rate (CAGR) of 11%, and that the global video game revenue will exceed $180B by 2021. Opportunities for monetization are growing constantly, but market consolidation has forced major publishers to overlook the untapped opportunity in the middle market.

Major public game companies like EA, Activision, Ubisoft etc. focus on developing big budget $300M+ revenue games that target a small portion of the market. These big budget games are reliable sellers but have limited profit potential due to their extremely high development costs. Major production studios’ narrow focus ignores the abundance of games that cost under $10M, while it is this part of the market that has a much higher potential to achieve large margins when the game excels.

In addition to middle market potential, blockchain technology has not yet been introduced to the gaming world. Blockchain allows for an unlimited creative space within any digital forum, while maintaining the integrity/security of the users on the platform.

The technology provides an interesting opportunity to the world of general gaming and eSports with the power to individualize and streamline each user’s experience across a variety of games.  Blockchain’s potential in the gaming world is evident, but it has not yet been completely utilized.

Solution

Planet Digital Partners plans to address the three main issues that the current gaming market landscape presents – the failure to target and infiltrate the middle market, the struggle for high budget projects to generate large profit margins, and the lack of blockchain technology in a saturated market.

PDP identifies the gap in the market as the ‘Sweet Spot’, where development costs are low and sales opportunities range from $50M to $150M.  Success stories within this ‘Sweet Spot’ are hits such as Rocket League, Mudrunner, NBA Playgrounds, and Minecraft.

PDP is focused on developing a portfolio of up to 10 games on up to 5 platforms (Nintendo, Playstation, Xbox, Apple and Samsung) in this segment of the market.

They plan to diversify across multiple genres to offset risk and increase the chance for success. By doing this, they strategically solve two of the main issues. They are entering the middle market sector with a strong set of adaptable games while keeping cost under $10M.

Planet has already had several hit brands including, Bass Pro Shops, Cooking Mama, and Cabela’s Hunt which have combined sold over $300M.  They have attracted a number of successful studios by offering a greater degree of equity in the products.

Aside from their portfolio, PDP has also created a plan to adopt blockchain in many areas to enhance their future titles. By working with game and protocol developers and their players, PDP will provide support and expand the possibilities of blockchain within games.

By altering game values with digital keys, subtle changes in gameplay have a big effect on the personal gaming experience, and leads to an infinite variety of gameplay when used online in multiplayer. This is a revolutionary concept and PDP is on their way to making blockchain a standard in the video game industry.

The Business Model

Planet Digital Partners is a straightforward video game development company focused on mid-sized titles. Their business model is simple and in line with the already established studio development model.  PDP will release games along a roadmap in multiple “waves” moving through development, manufacturing, and market sales cycles concurrently starting in 2019-2022. (see figure below)

The video game industry is unique because there are multiple revenue streams involved through various individual platforms – Console, Mobile, Network, and Streaming all present opportunities for monetization. PDP plans to utilize their resources to take advantage of each possible source of revenue for each game.

This however will take time and resources to streamline and create incentive systems that draw customers in.  For example, unlike console games that are generally sold at a fixed price with additional upsells of added content, mobile games are generally free to play with upsells being purchased by approximately 5% of players at costs ranging from $1-10.

The biggest new gaming initiative is cross platform play where mobile, console and PC players can play the same game which each other. This us an important breakthrough that is destined to have a dramatic effect on publishers’ bottom lines as the social aspect of gaming accelerates sales as a result of the shared experience amongst gamers.

It is also expected that Xbox and Nintendo Switch games will be offered in their eShops and be playable on their devices. This will significantly increase revenues to PDP as a result of an expanded installed hardware base – meaning that it is extremely scalable with already adapted consoles and mobile devices.

Mobile games are the fastest growing segment in the industry representing over $65b or 46% of sales.  PDP plans to publish the majority of its console games on mobile to maximize sales.

Players acquire mobile games via the Apple or Android app stores. These eShops charge a fee of approximately 30% of every transaction. They do not charge for free downloads or for placement in their eShops.

By aggregating multiple games from proven hit-makers, PDP will create a catalog of best-in-class, innovative gaming experiences, capturing a segment of the video game market that is currently ignored.

PDP Roadmap

PDP Roadmap

Investment Details

PDP Investors will have the option to choose between Class A and Class B Preferred Stock shares. All Preferred Stock shares – Class A and Class B – will be sold at a cost of $1 USD/share. In total, 38 million Preferred shares will be available, with a maximum of 20 million Class B shares available to be sold.

Class A subscribers will be issued shares via Digital Security Tokens available to trade on the seriesOne platform, per the Reg D/Reg S guidelines. Class A Preferred Stock will be solely dividend-based and will require a minimum investment of $25,000 USD.

 Class B subscribers will be issued traditional certificates via Series One. Class B Preferred Stock will be both dividend and equity based. Class B shareholders will have the option to convert their shares to Common Stock at a ratio of 8:1. Class B subscription will require a minimum investment of $100,000 USD.

Holders of all PDP Preferred Stock – Class A and Class B – will receive 80% of net profits of each game sale. This allocation will continue until shareholders have recouped 100% of their investment. Subsequently, shareholders will receive 40% of the net profits of all games moving forward (sequels or continuations.)

 When profit is deposited (quarterly) into the contract, those funds will be distributed pro rata into the shareholders wallet or account.

 A nationally known auditor, KPMG, will manage calculation of profit. KPMG will be one of two signers along with PDP on the dividend payment transaction to confirm the dividend amount being distributed is accurate according to the distribution formula outlined in the private placement memorandum (PPM.)

The Team

PDP represents a collective of the most successful management, development studios, distribution and marketing executives ever assembled.  From the former president of Playstation, to the founder of Take Two/Grand Theft Auto, the CEO of Guitar Hero, and the developers of Halo, NBA Playgrounds, Friday the 13th, and Quake, The Planet team is well positioned to deliver profits to its partners.  

PDP’s CEO Steve Grossman has been a successful communications industry executive for over 30 years, with management experience in entertainment marketing, recording, motion pictures, television, and video games.   

Steve has guided companies from conception to massive success including EMCI New York, a leading entertainment marketing company that began as a music sponsorship organization that represented the likes of Bruce Springsteen, The Rolling Stones, Rod Stewart and other major artists, to a full service entertainment marketing company.  

Under Mr. Grossman’s direction, EMCI’s clients grew to include Pepsi, Nintendo, Frito-Lay, Nabisco, Fox, Reebok, Pizza Hut, Philip Morris, Electronic Arts and Labatts. Mr. Grossman engineered over $45 million in sponsorship agreements between Nintendo and PepsiCo, Reebok, Nestle and Nabisco.  Mr. Grossman was also the Executive Producer of the Nintendo World Championships, the visionary precursor to Twitch and eSports. His direction is an invaluable asset to PDP.  

Board Advisor Kelly Sumner is another key member of the PDP team.  Kelly is currently chairman of two interactive games and technology companies, Quick Feet and Mediatonic.  Previously, Kelly held the CEO position at RedOctane, the games publisher of the world famous ‘Guitar Hero.’ Within two years of joining RedOctane, Kelly oversaw the development of one of the biggest games of the decade before ultimately selling the company in 2006 for $155M. In addition to this, Sumner ran the international operations for the publisher of ‘Grand Theft Auto’ before being promoted to CEO at Take-Two.  There he helped the company increase its revenue from virtually nothing to almost $1B. Kelly’s creative vision, leadership talent and passion for success is tangible. He interviewed with CNBC earlier this year (Feb. 15 2019) and discussed the teams plans for the future and how they will integrate blockchain. View it HERE 

Advisor Chris Deering is best known for his role as president of Sony PlayStation Europe. He is credited as one of the main marketers of the successful PlayStation and PlayStation 2 video game consoles.  These achievements earned Chris the title “Father of the PlayStation.” In 2003, Chris received the BAFTA Interactive Industry Award for his lifetime contributions to the game industry.  

He previously served as head of worldwide shaving at Gillette, then as Vice President of International Marketing for Atari, Inc, and following his involvement at Atari, Chris became head of international marketing at Columbia Pictures until the company was purchased by Sony in 1989 – which lead to his career as International Chief Operating Officer at Sony.  After his career at Sony, Chris became a Chairman, Board Director, and Director in game advertising at Codemasters Ltd., the world’s leading independent video game developer. Mr. Deering has been one of the industry’s top marketers and operative minds for over 25 years and provides PDP with inestimable knowledge and talent.

Matt Karch Creative Director/Board Advisor is one of the founders of Saber Interactive.  Since starting the company in 2000, Matthew has been instrumental in crafting the overall creative vision for the company.  

He spearheaded the design efforts for Saber’s first two projects Will Rock and TimeShift and was the driving force behind the innovative game concepts and the execution of the game design. Matthew has been instrumental in building Saber’s design team from 2 people to over 15 and plays an important role in the oversight of creative process.

Andrey Iones Creative Director/Board Advisor Andrey Iones has 12+ years of experience in the game development industry. He has worked on multiple game titles in varying capacities. He started in the industry by working on technology for pre-rendered graphics for major titles published by Activision and Electronic Arts. Since founding Saber in 2000, Andrey has been instrumental in building the company from a 3 person team to a 300+ person company that has been able to develop industry leading technology and to release multiple titles.  

Most recently Andrey spearheaded the simultaneous release of TimeShift on three SKU’s (the Xbox 360, PS3 and PC). Andrey has a PhD in computational geometry and is recognized as one of the world’s leading authorities on game technology. He has over 50 publications on computer graphics and rendering and is responsible for several major technologies currently employed in next generation development.  His development knowledge will prove to be indispensable to ensure PDP’s success.

Finally, Board Advisor Michael Maloney is a leading blockchain technology and strategy expert, and has been active in the blockchain space since 2011. Mr. Maloney has extensive technology advisory, architecture design, and blockchain experience, and is frequently featured on panels to discuss the future of blockchain. Currently he serves as interim CTO and advisor for several early stage ventures, and is an active commentator on the current market. In 2017 he helped co-found Galaxy Digital, the first merchant bank to serve the blockchain space, as the Head of Advisory.  

In addition to this, Mr. Maloney was a founding member of Ernst & Young’s (EY) Distributed Ledger Technology group, and led blockchain development for the firm. There he developed numerous blockchain applications for clients across a variety of industries, including; digital goods and games trading, supply chain management, anti-money laundering and KYC regulatory compliance, and language processing and machine learning marketplaces.  He is extremely active within the larger blockchain community; his passion and expertise are vital to PDP’s goal to implement blockchain gaming.

The Planet team is loaded.  These are only highlights of their talent saturated team and each member provides a vital set of expertise and perspective to their mission.  With the right industry savvy and knowledge, this team has the potential to achieve a successful attack on the middle market with low-cost games poised with high profit potential. Access to a more detailed report on PDP’s team members can be accessed through their website HERE.

Why We Like it

  1. The Team: PDP’s most attractive feature has to be its executive team and board. They are stacked with industry proven managers who share a passion for the video game industry and a drive to change its current landscape. They are creative leaders with an industry-proven track record of creating consistent massive hits that have since become household names. From the heads of the world’s leading entertainment studios, to leading edge blockchain and gaming developers, the Planet team is capable of creating a major industry disruption.
     
  1. Blockchain: The video game market has not yet been exposed to the creative power of blockchain and when it does, it is set to rapidly expand. With the talent at their back, PDP has the opportunity to introduce the greater gaming industry to the endless individualization power that blockchain can provide to players. Blockchain has already massively impacted the world of finance and its adoption potential has been noted by some of the top publications in the world.
     
  1. Profit Potential: The video game industry has consistently grown with the progression of technology. Today, professional eSports and mobile gaming are changing the way we look at and play video games and PDP plans to capitalize on this shift. Instead of ignoring the vast market potential that the middle market offers, Planet has positioned themselves well to reap the benefits of a major hit in a landscape of low cost productions through access on all major gaming platforms (whether it be console or mobile.)

Rating

Deal To Watch

Planet Digital Partners is a Deal To Watch. They have the team power, creative talent, and developmental resources with an already proven track record in the industry to deliver. All of this considered, you must be able to afford it.  Their minimum investment in a Class A subscription asks a hefty $25,000, while a Class B subscription requires an even loftier investment of $100,000.

If you can afford it, Planet Digital Partners offer an opportunity unlike any other in the video game industry, and give the investor the power to invest in a video game portfolio at ground level, creating potential for large returns. Regardless, there is an inherent risk in the fact that video games can flop and even the best game/ creators can fail.

Additionally, the terms of the deal are a bit unique. Please read below. This is directly from the company.

“Shareholders will receive 80% of Net Profits until investors recoup 100% and 40% thereafter, plus 5% of Net Profits on sequels through 2025.

Preferred Shares will be directly tied to every game released by PDP, and as PDP advances from Wave 1 to Wave 2 and so forth, the shareholders will earn profits from an entire library of content in the marketplace.”

This will create a layer of dividend income for investors on top of the value of the shares themselves, which will be tradable within 12 months after purchase by U.S. investors and immediately by foreign investors once exchanges launch as expected in 2019.

While interesting, make sure you understand the pluses and minuses of investing in this type of arrangement.

On the positive side, PDP has already been proven with success stories in Cooking Mama, Bass Pro Shops, and Cabela’s Hunt – all three combining for a tally of $300M in revenues and counting.

By providing potential investor with a portfolio, they offset the risk for a potential dud with a collection of diverse titles that stretch across a variety of platforms.

They have already begun planning two games to add to the group including ‘Futbol Playgrounds’ (very similar to NBA playgrounds but this time for soccer – the industry’s largest sports segment)  and ‘Horde Mode’ a 4-player co-op shooter. Their number one goal is to create ‘GREAT games’ that will perform in the market.

From their talent armed team to their simple but strategic plan, Planet Digital Partners provide a reasonable cause for consideration and are poised to capitalize on an untapped video game market.

Analysis written by Shihua Wu on May 3, 2019.

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Planet Digital Partners on Self Managed 2019
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Platform: Self Managed
Security Type: Equity - Common

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