IN THIS NEWSLETTER: A new chart-filled mini-essay on OnlyF*ns’ economics, comments on my Roblox essay following last week’s Roblox Developers Conference 2024, and a short essay on the blockbuster success of the video game Black Myth: Wukong and what it means for media (a full copy of the essay is in this email).

NEW MINI-ESSAY: Breaking Down OnlyF*ns’ Stunning Economics. On Friday, I unexpectedly set off a bit of a news cycle after tweeting out a few shocking takeaways from newly-uploaded (and clumsily scanned) UK regulatory filings from OnlyF*ns. In 2023, the platform had 4.1M creators, 305M users, $6.6B in revenue ($31M per employee), $5.3B in creator payouts (more than total NBA or Premier League payroll), and $650M in pre-tax profit ($15M per employee). Over the last 5 years, creators have received over $15B. Given the response, I decided to do a dedicated and chart-filled breakdown on the business, which is probably the most holistically successful UK start-up since DeepMind in 2010, media platform since TikTok in 2014, and creator platform ever. Everyone knows the category is enormous, but the specifics are astonishing. The impact of Generative AI will be equally fascinating (also discussed).

LAST MONTH’S ESSAY: Roblox is Already the Biggest Game In The World. Why Can't It Make a Profit (And How Can It)? With 380MM MAUs, Roblox counts more players than the entire AAA gaming ecosystem, has 2x the engagement of Disney+, and rivals many social networks in size. But Roblox has yet to profit. Can it ever build a P&L that compares to its operating scale?

Since I wrote this piece, Roblox not only reaffirmed its goal of reaching 1B DAU (it has 80MM today), but a nearer-term (but undated) goal of reaching 300MM users and 10% of worldwide video gaming revenues. Based on 2023 figures, this share would we worth about $20B, or 5.25x Roblox’s $3.8B in TTM bookings. This means Roblox expects to grow ARPU at least 40% faster than its users, which would go a long way to addressing its profit problems. As part of this, the company announced it would finally allowed developers to gate access to their experiences behind $10-50 purchases, and would receive 50-70% in revenue sharing (versus the traditional 25%). I had predicted such a move in my essay as it can substantially increase net ARPU (aiding profits) and encourage greater developer investment (which helps with ARPU and user growth), though there are many challenges to scaling paid game sales on a mobile and otherwise free-to-play platform.

NEW MINI-ESSAY: The Success of Black Myth: Wukong And What It Means for Media. Since its release on August 20th, Black Myth: Wukong, produced by the Chinese game developer Game Science and based on classic Chinese folklore, has sold over 20 million copies, making it one of the fastest selling games of all time. Though Steam gets more popular each year, which helps new releases break old records, the title blew through the platform’s all-time record for concurrent players. More remarkable still, Wukong achieved this new record despite being a single-player game and an expensive one at that (most of the top games are multiplayer or free, if not both.) By the end of 2024, Wukong will likely have outsold 2023’s biggest hits, including The Legend of Zelda: Tears of the Kingdom, Hogwarts Legacy, and Spider-Man 2, titles that, like Wukong, are epic and cinematic single-player adventures. The game cost $70 million to make and has grossed close to $1B so far (inc. taxes & platform fees).

Contrary to some reporting, Wukong is not China’s first global “AAA” hit game, nor its biggest (by revenue or players.) It’s also not the most innovative (in technology, gameplay, or business model), highest acclaimed, or most global Chinese-made hit, either. Indeed, miHoYo’s Genshin Impact, released in 2020, probably runs the table on such measures. However, there have been many other massive AAA titles from China, including the Hans Zimmer–scored Honor of Kings, the MMO Fantasy Westward Journey, and Honkai: Star Rail, that have amassed more revenue and more players than the best of the West, as well as Wukong. 

Part of what makes Wukong so unique is the discourse around why and how it’s such a success - the game’s Metacritic rating of 81 is solid (“Generally Favorable”) but far below typical bestsellers and Game of the Year candidates, and few suggest that it is extraordinary or otherwise a “must play.” I haven’t completed Wukong and so I don’t want to comment on its quality, but the significance of Wukong is actually greater if its sales exceed its splendor (and to the extent it does). Moreover, I am not the target market. And that’s the point.

Game Science’s Wukong is widely considered the first Chinese-produced game that boasts visuals, storytelling, and gameplay that might compare to the greatest narrative games made by the greatest American, Japanese, and European studios. Maybe it falls short of these titles, but in contrast, it’s made for and of Chinese culture. Sales reflect this bearing. At least 75% of copies sold are believed to be from within China, whereas Western singleplayer titles will typically hit single-digit sales in the country. Given Wukong’s total sales figures, the title has therefore outsold Spider-Man, Hogwarts, and Zelda several times over in China (and even outside of China, Wukong would have outstripped groundbreaking games such as Alan Wake 2, another 2023 release, and which was also my Game of the Year).

The extraordinary success of a domestically produced, domestically focused, and domestically embraced title is the inevitable and increasingly familiar outcome of years of protectionism as well as growth in national capability and audiences. Fifteen years ago, building up China’s own filmmaking capability was a national priority — one aided by the relative maturity of the filmmaking process and the practicality of American films physically shooting in the country (which made it easier to train and upskill local talent.) This strategy has led to a swift and near total shift to local product. From 2011 through 2013, an average of 5.3 of the Top 10 films released in China were from Hollywood. From 2021 through 2023, only 1.3 were. According to critics, China’s hits are often “worse” than the Western films they displace — or at least not much better. But they are Chinese films. 

[Essay continues below image]

2017’s Wolf Warrior 2 is in the style of a Reagan-era action movie, only inverted. Set in Africa and starring a muscled and jaded super-soldier in the Rambo template, the movie tells of noble China rescuing Africa from dreaded American imperialism. The film’s bad guy is played by New York–born Frank Grillo, most familiar to U.S. audiences as an evil American mercenary in Captain America: Winter Soldier. This villain, “Big Daddy,” is the spitting image of the evil colonel in Avatar. Meanwhile, Wolf Warrior 2’s hero scolds America for its involvement in the slave trade and announces Chinese frailty to be a thing of the past. 2021’s The Battle at Lake Changjin, commissioned by the CCP as part of its 100th anniversary celebration and broadly resembling the war epics of Steven Spielberg and Clint Eastwood, is a fictionalized version of the Korean War’s Battle of Chosin Reservoir, in which the Chinese People's Volunteer Army forced the U.S. military into withdrawal. The shift is hardly limited to action movies. Ne Zha is a family-oriented film that resembles an animated Disney film, particularly Frozen. Like Wukong, Ne Zha focuses on sixteenth-century Chinese folklore (in this case, Nezha, a mythological deity), and tells a rousing story in the shenmo (gods and demons) genre. Its humor is decidedly non-Western.

In markets with longstanding film industries, such as India and France, local productions have reigned supreme for decades. Only four of the 50 highest grossing films released in India are from outside Bollywood. The highest-grossing film in Japanese history is an anime. And even in markets far smaller and less wealthy than that of China, we see the same effect. In Nigeria, a Nollywood-produced gangster comedy, Oma Ghetto 2, toppled Avengers: Endgame by 10%, becoming the biggest film in the country’s history - even though it released during 2020 (in the middle of the COVID-19 delta wave and long before U.S. theaters re-opened).

I wrote about these trends in detail in 2022, and two years later, my theses have been strengthened with newer data. In India, the number of Western films in the top 50 has fallen from five to four (soon to be three) and those fell an average of 10 slots down the list. In Nollywood, two more films have passed Oma Ghetto 2 by 2%–7% each. Streaming video services have long known that the ceiling for foreign subscribers is low unless local original investment is high.

The rise of regionally rooted AAA video games have been slower than in film due to their comparatively high production cost and rate of technological, creative, and business model change, and smaller market. But as I wrote, such a transition was inevitable - and it is aided by the growing capability and ease-of-use of engines such as Unity and Unreal (Wukong runs on UE5), as well as affordability and size of asset store libraries, and now Generative AI. 

[Related Essay: What China, Marvel, and Avatar Tell Us About the Future of Blockbuster Franchises]

The result will be a growing number of hits that target non-Western regions, countries, and cultures — some of which, like Wukong, will go far beyond these markets. After all, The Avengers is a worldwide hit despite the fact that five of its original six leads were part of the U.S. Military apparatus (and the exception is a literal alien).

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